On January 1, 2023, Legis Company issued 10-year, P200,000 face value, 6% bonds at par (payable annually on January 1). Each P1,000 bond is convertible into 30 shares of Legis P2 par value ordinary shares. The company has had 10,000 ordinary shares (and no preference shares) outstanding throughout its life. None of the bonds have been converted as of the end of 2024. Legis also adopted a share-option plan that granted options to key executives to purchase 4,000 shares of the company's ordinary shares. The options were granted on January 2, 2023, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company (the service period is 2 years). The options expire 6 years from the date of grant. The option price was set at P4, and the fair value option pricing model determines the total compensation expense to be P18,000. All of the options were exercised during the year 2025: 3,000 on January 3 when the market price was P6, and 1,000 on May 1 when the market price was P7 a share. (Ignore all tax effects.)

On January 1, 2023, Legis Company issued 10-year, P200,000 face value, 6% bonds at par (payable annually on January 1). Each P1,000 bond is convertible into 30 shares of Legis P2 par value ordinary shares. The company has had 10,000 ordinary shares (and no preference shares) outstanding throughout its life. None of the bonds have been converted as of the end of 2024. Legis also adopted a share-option plan that granted options to key executives to purchase 4,000 shares of the company's ordinary shares. The options were granted on January 2, 2023, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company (the service period is 2 years). The options expire 6 years from the date of grant. The option price was set at P4, and the fair value option pricing model determines the total compensation expense to be P18,000. All of the options were exercised during the year 2025: 3,000 on January 3 when the market price was P6, and 1,000 on May 1 when the market price was P7 a share. (Ignore all tax effects.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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