18. A convertible bond with par value of $1,000,000 and discount on convertible bond of $25,000. It will be
converted to 40,000 common shares with no par value. At the time of conversion, the market value is $26 per
share. Record the journal entries per book value method and market value method (4 points).
19. On January 1, 2018, B2B Co. obtain a right to use a government land for $100,000 in a three-year period. It
also promised to restore the land at the end of 2019. It is estimated the restoration will cost $30,000 at the end
of 2019. With 6\% risk discount rate what is the initial cost for the right to use the land at January 1,
2018 and record journal entries needed for the asset retirement obligation and amortization (straight-
line) at December 31, 2018 (6 points).
20. To fund a project, on January 1, 2018, B2B Co., promised to pay three annual installments ($50,000 each) to
Hartford Inc. for cash right away. It is estimated the effective interest rate is 5\%. What should the journal
entries be recorded at January 1 and December 31, 2018 (5 points).