with a face value of P1,000 per bond (total proceeds received from issuance of the bonds are P1,000,000). Interest is payab
with a face value of P1,000 per bond (total proceeds received from issuance of the bonds are P1,000,000). Interest is payab
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 21E: On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be...
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Mae Jong Corporation issues 1,000 convertible bonds at the beginning of 2021. The bonds have a four-year term with a stated rate of interest of 6 percent, and are issued at par with a face value of P1,000 per bond (total proceeds received from issuance of the bonds are P1,000,000). Interest is payable annually at December 31. Each bond is convertible into 250 ordinary shares with a par value of P1. The market rate of interest on similar non-convertible debt is 9 percent. Compute the liability component of Mae Jong’s convertible debt.
|
|
PV of 1 for 4 periods |
PV of Ordinary Annuity for 4 periods |
|
6% |
0.79209 |
3.46611 |
|
9% |
0.70843 |
3.23972 |
The issuance of convertible bonds increased the entity’s equity by:
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