In 2021, a company issued 6% bonds with a maturity value of P40,000, together with 1,000 shares of its P10 par value ordinary share, for a combined cash amount of P150,000. The market value of the company's share on that date cannot be ascertained. If the bonds were issued separately, they would have been sold for P35,000 on an 8% yield to maturity basis. Determine the increase in share premium as a result of this transaction.

In 2021, a company issued 6% bonds with a maturity value of P40,000, together with 1,000 shares of its P10 par value ordinary share, for a combined cash amount of P150,000. The market value of the company's share on that date cannot be ascertained. If the bonds were issued separately, they would have been sold for P35,000 on an 8% yield to maturity basis. Determine the increase in share premium as a result of this transaction.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EB: Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual...

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