Choice "C" is correct. Under IFRS, both a liability (bond) and an equity component (conversion feature) should be recognized when convertible bonds are issued. The bond liability is valued at fair value, with the difference between the actual proceeds received and the fair value of the bond liability recorded as a component of equity.
Choice "a" is incorrect. The conversion feature is recognized as a component of equity under IFRS. No recognition is given to the conversion feature under U.S. GAAP.
Choice "d" is incorrect. Convertible bonds are generally issued for more than face value because of the value of the conversion feature to bondholders.
Choice "b" is incorrect. The conversion feature of convertible bonds cannot be separately traded.