Response to the following questions:
1. What are convertible bonds? Why would a company issue convertible debt?
2. What two alternative methods are available to account for the issuance of convertible debt? What method did GAAP finally require? Why?
3. If a company that uses IFRS had a significant amount of convertible debt, how would its debt-to-equity ratio be affected relative to if it had used U.S. GAAP?
If possible, please give examples to better understand your response.