@ 11% @12% PV of a single payment of 1 for 5 periods 0.59 0.57 PV of an ordinary annuity of 1 for 5 periods 3.70 3.60 What is the initial carrying amount of the bonds payable? 4,985,000 b. 4,830,000
At the beginning of current year, Uranus Company issued P5,000,000 face amount, 5-year bond at 109. Each P1,000 bond was issued with 50 detachable share warrants, each of which entitled the bondholder to purchase one ordinary share of P5 par value at P25. Immediately after issuance, the market value of each warrant was P5. The stated interest rate on the bonds is 11% payable annually every December 31. However, the prevailing market rate of interest for similar bonds without warrant is 12%.
@ 11% @12%
PV of a single payment of 1 for 5 periods 0.59 0.57
PV of an ordinary annuity of 1 for 5 periods 3.70 3.60
What is the initial carrying amount of the bonds payable?
- 4,985,000 b. 4,830,000 c. 5,000,000 d. 5,450,000
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