IFRS 9 Financial Instruments

**Section A** SolarMax, a renewable energy firm, issued $5 million of 4% convertible bonds at par on 1 January 20X5. Interest is payable annually in arrears. The bonds are redeemable at par on 31 December 20X7 or convertible into equity shares. The prevailing market interest rate for similar bonds without the conversion option is 8%. Discount factors at 8%: Year 1: 0.926, Year 2: 0.857, Year 3: 0.794. What amount will be credited to equity upon the initial recognition of this compound financial instrument on 1 January 20X5?