North American Gold and Silver North American Gold and Silver (NAGS) is a start-up company, closely held by a small group of successful businesspeople, geologists, and engineers. NAGS is a junior mining company that explores for gold and silver. During its first year of operations, the company focused on raising capital and purchasing assets. Jack Gerikyan, the CFO, is preparing the financial statements for the December 31, 2017 year end. Jack is determining whether the company should adopt ASPE or IFRS. Management does not expect to go public anytime in the near future. However, management is working with a major financial institution in the hopes of securing long-term debt. Therefore, Jack would like to present a strong statement of financial position and favourable debt to equity ratio. During the year, the company financed initial operations by issuing the following instruments: 1. On January 1, the company issued $1.5 million of five-year, 6% convertible bonds at par value. Each $1,000 bond is convertible into 100 common shares. A similar bond (without conversion feature) would have been issued at a market yield of 9%. On December 31, $200,000 worth of bonds were converted to common shares. 2. On April 1, the company issued 15,000 8% non-cumulative, retractable preferred shares for $100 per share. The shares are retractable by the holder on or after September 1 of the current year, and redeemable at the option of the company on or after September 2 of the current year. Commencing on September 2 the company is required to purchase 10% annually of the total outstanding preferred shares at $105 per share. Required Assume the role of Jack Gerikyan, and prepare a report to the board of directors that discusses the recognition, measurement, and presentation of the financial instruments issued. (Show all the calculations and the journal entries for ASPE and IFRS where needed)
