Keir Corporation issues 10%, P5,000,000, 10-year bonds with face value of P1,000 and nondetachable share warrants at 110. Each bond carried one detachable warrant that permits the bondholder to purchase 20 equity shares, par P50, at P55 per share. The prevailing market rate of interest for similar bonds without warrants is 12% per annum. On the date of exercise of the warrants, how much is the amount of 'ordinary shares' to be recorded?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Keir Corporation issues 10%, P5,000,000, 10-year bonds with face value of P1,000
and nondetachable share warrants at 110. Each bond carried one detachable
warrant that permits the bondholder to purchase 20 equity shares, par P50, at P55
per share The prevailing market rate of interest for similar bonds without warrants
is 12% per annum.
On the date of exercise of the warrants, how much is the amount of 'ordinary shares
to be recorded?
Transcribed Image Text:Keir Corporation issues 10%, P5,000,000, 10-year bonds with face value of P1,000 and nondetachable share warrants at 110. Each bond carried one detachable warrant that permits the bondholder to purchase 20 equity shares, par P50, at P55 per share The prevailing market rate of interest for similar bonds without warrants is 12% per annum. On the date of exercise of the warrants, how much is the amount of 'ordinary shares to be recorded?
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