On January 1, 2016, Saul Company issued convertible bonds with a face amount of P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100 par value. The bond have a 5-year life with 10% stated interest rate payable annually every December 31. The fair value of the convertible bonds without conversion option is computed at P 5,399,300 on January 1, 2016. On Dec. 31, 2018, the convertible bonds were not converted but fully paid for P 5,550,000. On such date, the fair value of the bonds without conversion privilege is P 5,400,000 and the carrying amount is P 5,178,300. What is the equity component arising from the issuance of bonds payable on January 1, 2016?
On January 1, 2016, Saul Company issued convertible bonds with a face amount of P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100 par value. The bond have a 5-year life with 10% stated interest rate payable annually every December 31. The fair value of the convertible bonds without conversion option is computed at P 5,399,300 on January 1, 2016. On Dec. 31, 2018, the convertible bonds were not converted but fully paid for P 5,550,000. On such date, the fair value of the bonds without conversion privilege is P 5,400,000 and the carrying amount is P 5,178,300. What is the equity component arising from the issuance of bonds payable on January 1, 2016?
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 10QE
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4. What is the equity equity component arising from the insurrance bonds payable on January 1, 2016?
5. What is the loss on the extingushed of the convertible bonds payable on December 31.2018
![On January 1, 2016, Saul Company issued convertible bonds with a face amount of
P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100
par value. The bond have a 5-year life with 10% stated interest rate payable annually
every December 31.
The fair value of the convertible bonds without conversion option is computed at
P 5,399,300 on January 1, 2016.
On Dec. 31, 2018, the convertible bonds were not converted but fully paid for
P 5,550,000.
On such date, the fair value of the bonds without conversion privilege is P 5,400,000
and the carrying amount is P 5,178,300.
What is the equity component arising from the issuance of bonds payable on January
1, 2016?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe32b068a-3583-4b7f-b219-c3e7fa071fad%2Fba335abc-1caf-446f-bc45-3a9665f389b4%2F62i8sbr_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2016, Saul Company issued convertible bonds with a face amount of
P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100
par value. The bond have a 5-year life with 10% stated interest rate payable annually
every December 31.
The fair value of the convertible bonds without conversion option is computed at
P 5,399,300 on January 1, 2016.
On Dec. 31, 2018, the convertible bonds were not converted but fully paid for
P 5,550,000.
On such date, the fair value of the bonds without conversion privilege is P 5,400,000
and the carrying amount is P 5,178,300.
What is the equity component arising from the issuance of bonds payable on January
1, 2016?
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