On January 1, 2022, Iced Latte Corporation issued 5,000 10-year bonds of 12% P1,000 face value, each with warrants to acquire ordinary shares at P60 per share. The interest on the bonds is payable annually every December 31. Each bond contains one warrant which can be used to acquire 5 shares of P50 par value ordinary shares. It is estimated that without the warrants, the bonds would sell at 98 (at an effective interest of 12.36%) The bond price with warrants is 106. What amount is allocated to equity upon issuance of bonds?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2022, Iced Latte Corporation issued 5,000 10-year bonds of 12% P1,000 face value, each with warrants to acquire ordinary shares at P60 per share. The interest on the bonds is payable annually every December 31. Each bond contains one warrant which can be used to acquire 5 shares of P50 par value ordinary shares. It is estimated that without the warrants, the bonds would sell at 98 (at an effective interest of 12.36%) The bond price with warrants is 106. What amount is allocated to equity upon issuance of bonds? 

 

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