What is the premium bonds payable on January 1,2016? On January 1, 2016, Saul Company issued convertible bonds with a face amount ofP 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100par value. The bond have a 5-year life with 10% stated interest rate payable annuallyevery December 31.The fair value of the convertible bonds without conversion option is computed atP 5,399,300 on January 1, 2016.Rectangular SnipOn Dec. 31, 2018, the convertible bonds were not converted but fully paid forP5,550,000.On such date, the fair value of the bonds without conversion privilege is P 5,400,000and the carrying amount is P 5,178,300.What is the carrying amount of the bonds payable on January 1, 2016?

It is the amount liable to the bondholders by the issuer of bonds. These bonds payable will be…

On January 1, 2016, Saul Company issued convertible bonds with a face amount of P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100 par value. The bond have a 5-year life with 10% stated interest rate payable annually

On January 1, 2016, Saul Company issued convertible bonds with a face amount of P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100 par value. The bond have a 5-year life with 10% stated interest rate payable annually

Financial Reporting, Financial Statement Analysis and Valuation

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ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

Section: Chapter Questions

Problem 10QE

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Question

What is the premium bonds payable on January 1,2016?

On January 1, 2016, Saul Company issued convertible bonds with a face amount of
P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100
par value. The bond have a 5-year life with 10% stated interest rate payable annually
every December 31.
The fair value of the convertible bonds without conversion option is computed at
P 5,399,300 on January 1, 2016.
Rectangular Snip
On Dec. 31, 2018, the convertible bonds were not converted but fully paid for
P5,550,000.
On such date, the fair value of the bonds without conversion privilege is P 5,400,000
and the carrying amount is P 5,178,300.
What is the carrying amount of the bonds payable on January 1, 2016?

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