On January 1, 20x1, Zevrek Co. issues bonds with face amount of ₱4,000,000 for ₱4,100,000. The bonds mature on December 31, 20x4 and pay annual interest of 16%. The bonds can be converted into 10,000 of Zevrek Co.’s ordinary shares with par value of ₱300 per share. On January 1, 20x1, the bonds, without the conversion feature, were selling at a price that reflects a yield rate of 18%. On January 1, 20x3, all the bonds were retired. Zevrek Co. paid a call premium of ₱300,000 on the retirement. On retirement date, the bonds, without the conversion feature, were selling at 105. How much is the gain (loss) on the retirement of the bonds? a. 325,247b. (325,247)c. 125,247 d. 0
On January 1, 20x1, Zevrek Co. issues bonds with face amount of ₱4,000,000 for ₱4,100,000. The bonds mature on December 31, 20x4 and pay annual interest of 16%. The bonds can be converted into 10,000 of Zevrek Co.’s ordinary shares with par value of ₱300 per share. On January 1, 20x1, the bonds, without the conversion feature, were selling at a price that reflects a yield rate of 18%. On January 1, 20x3, all the bonds were retired. Zevrek Co. paid a call premium of ₱300,000 on the retirement. On retirement date, the bonds, without the conversion feature, were selling at 105. How much is the gain (loss) on the retirement of the bonds? a. 325,247b. (325,247)c. 125,247 d. 0
Chapter6: Bonds (debt) - Characteristics And Valuation
Section: Chapter Questions
Problem 9PROB
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Pls answer number 8 with solutions
On January 1, 20x1, Zevrek Co. issues bonds with face amount of ₱4,000,000 for ₱4,100,000. The bonds mature on December 31, 20x4 and pay annual interest of 16%. The bonds can be converted into 10,000 of Zevrek Co.’s ordinary shares with par value of ₱300 per share. On January 1, 20x1, the bonds, without the conversion feature, were selling at a price that reflects a yield rate of 18%. On January 1, 20x3, all the bonds were retired. Zevrek Co. paid a call premium of ₱300,000 on the retirement. On retirement date, the bonds, without the conversion feature, were selling at 105. How much is the gain (loss) on the retirement of the bonds?
a. 325,247
b. (325,247)
c. 125,247
d. 0
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