Understanding Business
Understanding Business
12th Edition
ISBN: 9781259929434
Author: William Nickels
Publisher: McGraw-Hill Education
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Chapter 19.4, Problem 8TP
Summary Introduction

To determine: The difference betweenan unsecured and a secured bond.

Introduction:

Bond refers to a debt instrument which has a longer period for maturity and a fixed interest rate. Bonds are issued at that time when an entity needs a huge amount of fund.

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Show your solution in good accounting form On July 1, 2021, after recording interest and amortization, BLUE Company converted ₱5,000,000 of its 12% convertible bonds into 50,000 shares of ₱10 par value ordinary share. On the conversion date, the carrying amount of the bonds was ₱6,000,000, the market value of the bonds was ₱6,500,000, and BLUE's ordinary shares were publicly trading at ₱150 per share. BLUE incurred ₱200,000 in connection with the conversion. What amount of additional share premium should BLUE record as a result of the conversion?    a. ₱ 6,000,000 b. ₱ 5,800,000 c. ₱ 5,300,000 d. ₱ 5,500,000
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