On January 1, 2019, COT Co. issued P1,500,000, 12% convertible bonds due after 4 years. The bonds were sold for P1,595,082 and are convertible into P10 par ordinary shares at a conversion price of P25 per share. On December 31, 2020, COT Co. in an effort to induce conversion of the bonds into ordinary share, reduced the conversion price to P20 per share for bondholders that converted within 40 days. On this date, the fair value of the bonds is P1,600,000 and the bonds have a carrying amount of P1,552,049.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January 1, 2019, COT Co. issued P1,500,000, 12% convertible bonds

due after 4 years. The bonds were sold for P1,595,082 and are convertible

into P10 par ordinary shares at a conversion price of P25 per share.

On December 31, 2020, COT Co. in an effort to induce conversion of the

bonds into ordinary share, reduced the conversion price to P20 per share

for bondholders that converted within 40 days. On this date, the fair value

of the bonds is P1,600,000 and the bonds have a carrying amount of

P1,552,049.

All the bond holders accepted the offer on December 31, 2020. On the date

of conversion, the fair value of the COT Co.'s ordinary share is P30 per share.

How much is the amount to be recognized in profit or loss as a result inducedc onversion?

 

 

 

 

On January 1, 2019, COT Co. İssued P1,500,000, 12% convertible bonds
|due after 4 years. The bonds were sold for P1,595,082 and are convertible
into P10 par ordinary shares at a conversion price of P25 per share.
On December 31, 2020, COT Co. in an effort to induce conversion of the
bonds into ordinary share, reduced the conversion price to P20 per share
for bondholders that converted within 40 days. On this date, the fair value
of the bonds is P1,600,000 and the bonds have a carrying amount of
P1,552,049.
All the bond holders accepted the offer on December 31, 2020. On the date
of conversion, the fair value of the COT Co.'s ordinary share is P30 per share.
How much is the amount to be recognized in profit or loss as a result induced
conversion?
Transcribed Image Text:On January 1, 2019, COT Co. İssued P1,500,000, 12% convertible bonds |due after 4 years. The bonds were sold for P1,595,082 and are convertible into P10 par ordinary shares at a conversion price of P25 per share. On December 31, 2020, COT Co. in an effort to induce conversion of the bonds into ordinary share, reduced the conversion price to P20 per share for bondholders that converted within 40 days. On this date, the fair value of the bonds is P1,600,000 and the bonds have a carrying amount of P1,552,049. All the bond holders accepted the offer on December 31, 2020. On the date of conversion, the fair value of the COT Co.'s ordinary share is P30 per share. How much is the amount to be recognized in profit or loss as a result induced conversion?
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