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 P5,550,000. 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 loss on the extinguishment 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 P5,550,000. 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 loss on the extinguishment of the convertible bonds payable on December 31, 2018?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![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
P5,550,000.
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 loss on the extinguishment of the convertible bonds payable on
December 31, 2018?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe32b068a-3583-4b7f-b219-c3e7fa071fad%2Fea24162a-2f24-49a2-985c-cd7f25c6fb9c%2F1e647oi_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
P5,550,000.
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 loss on the extinguishment of the convertible bonds payable on
December 31, 2018?
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