On 1 October 2013, Bertrand issued $10 million convertible loan notes which carry a nominal interest (coupon) rate
of 5% per annum.

The loan notes are redeemable on 30 September 2016 at par for cash or can be exchanged for equity shares.

A similar loan note, without the conversion option, would have required Bertrand to pay an interest rate of 8%.

The present value of $1 receivable at the end of each year, based on discount rates of 5% and 8%, can be taken as:

How would the convertible loan appear in Bertrand’s statement of financial position on initial recognition (1 October 2013)?