On January 1, 2021, This Company issued 12%, 3 year, P4,000,000 convertible bonds at 110. Each P4,000 bond is convertible into 8 shares with par value per share of P400. Principal is due on December 31, 2023 but interests are due annually at each year-end. When the bonds were issued, they were selling at a yield to maturity market rate of 10% without the conversion option. On December 31, 2022, half of the bonds were converted into equity. Conversion costs incurred amounted to P80,000. How much is the net increase in equity as a result of the conversion?
On January 1, 2021, This Company issued 12%, 3 year, P4,000,000 convertible bonds at 110. Each P4,000 bond is convertible into 8 shares with par value per share of P400. Principal is due on December 31, 2023 but interests are due annually at each year-end. When the bonds were issued, they were selling at a yield to maturity market rate of 10% without the conversion option. On December 31, 2022, half of the bonds were converted into equity. Conversion costs incurred amounted to P80,000. How much is the net increase in equity as a result of the conversion?
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter15: Shareholders’ Equity: Capital Contributions And Distributions
Section: Chapter Questions
Problem 20E
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On January 1, 2021, This Company issued 12%, 3 year, P4,000,000 convertible bonds at 110. Each P4,000 bond is convertible into 8 shares with par value per share of P400. Principal is due on December 31, 2023 but interests are due annually at each year-end. When the bonds were issued, they were selling at a yield to maturity market rate of 10% without the conversion option. On December 31, 2022, half of the bonds were converted into equity. Conversion costs incurred amounted to P80,000. How much is the net increase in equity as a result of the conversion?
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