12. On December 31, 2021,PISTACHIO Company hadoutstanding P20 million face valueconvertible bonds maturing onDecember 31, 2024. Interest ispayable annually on December 31.Each P1,000 bond is convertibleinto 60 shares of PISTACHIO'sPP10 par ordinary shares. Theunamortized premium balance onDecember 31, 2021 is P350,000.The balance of Share premiumarising from bond conversionprivilege is P640,000. On thisdate, an individual holding 2,000 ofthe bonds exercised theconversion privilege when themarket value of PISTACHIO'sordinary share was P18. What isthe amount credited to sharepremium upon conversion of thebonds? *P 1,790,000P 800,000P -0 -P 899,000

Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Answered: 12. On December 31, 2021, PISTACHIO…

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12. On December 31, 2021, PISTACHIO Company had outstanding P20 million face valu convertible bonds maturing on

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Debenture Valuation

A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.

Note Valuation

It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:

Question

12. On December 31, 2021,
PISTACHIO Company had
outstanding P20 million face value
convertible bonds maturing on
December 31, 2024. Interest is
payable annually on December 31.
Each P1,000 bond is convertible
into 60 shares of PISTACHIO's
PP10 par ordinary shares. The
unamortized premium balance on
December 31, 2021 is P350,000.
The balance of Share premium
arising from bond conversion
privilege is P640,000. On this
date, an individual holding 2,000 of
the bonds exercised the
conversion privilege when the
market value of PISTACHIO's
ordinary share was P18. What is
the amount credited to share
premium upon conversion of the
bonds? *
P 1,790,000
P 800,000
P -0 -
P 899,000

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