ACCOUNTING FOR FINANCIAL LIABILITIES

These are not embedded derivatives, but financial liabilities. IndAS does not consider hedge accounting for derivatives like futures and options not unless a standard requires to or permits it. 

Bank a/c

To Bond liability a/c

when you issue shares  on redemption date instead of cash, it should be like derecognise liability and 

Bond liability a/c

To Share Capital a/c

Here, Share Capital is credited because, Share are issued to bond holder. Then, bank is not adjusted because, the liability to pay cash through share settlement is still existing. 

@ Clement K. Rudder

Thank you.