Problem 12 Problem 20-12 (AICPA Adapted)At the beginning of the current year, Cove Company,doely-held entity, issued ON bonda with a maturity valueof P6,000,000, together with 10,000 ordinary shares of P50par value, for a combined eash amount of PIL.000.000.If iasued separately, the bonda would have sold forP4,000,000 on an 8% yield to maturity basia1 What amount of the proceeda should be allocated tothe ordinary shares?a. 4.000,000b. 7,000,0008,000,000d. 5,000,0002 What amount should be reported for share premiumon the issuance of the ordinary sharee?A 7,600,000b6,500,000e. 5,500,000d. 4.300,000

When stock is issued along with other security (lump sum sales), the proceeds can be allocated by…

(AICPA Adapted) M the beginning of the eurrent vear, Ceve Compan, donely-held entity, iaued ON bonde with a maturity value P6.000.000, together with 10.000 rinary shares of P50 par value, for a combined caah amount of PIL000.000. Probiem If insed separately, the bende would have old for P4000.000 on an 8% yield to maturity besia 1 What amount of the proceeds ahould be allocated to the ordinary shares 4,000,000 A 7,000,000 8,000,000 d. 5,000.000 2 What amount should be reported for share premium on the issuance of the ordinary shares? 7,500.000 6,500,000 e 5,500,000 4.300.000

(AICPA Adapted) M the beginning of the eurrent vear, Ceve Compan, donely-held entity, iaued ON bonde with a maturity value P6.000.000, together with 10.000 rinary shares of P50 par value, for a combined caah amount of PIL000.000. Probiem If insed separately, the bende would have old for P4000.000 on an 8% yield to maturity besia 1 What amount of the proceeds ahould be allocated to the ordinary shares 4,000,000 A 7,000,000 8,000,000 d. 5,000.000 2 What amount should be reported for share premium on the issuance of the ordinary shares? 7,500.000 6,500,000 e 5,500,000 4.300.000

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 14PROB

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