Detailed Answer
(c) The requirement is to identify how Logan should
recognize the issuance of the bonds. Answer (c) is correct because
IFRS provides that financial instruments with characteristics
of both debt and equity are compound instruments and must
be separated into its respective components. The liability is valued
at the fair value at the date of issuance and the residual value
is assigned to the equity component. Therefore, the bond should
be recorded at its fair value of $480,000 and an equity component
should be recorded for 20,000. Answers (a), (b), and (d)
are incorrect.