On January 1, 20x1, Zevrek Co. issues bonds with face amount of ₱4,000,000 for ₱4,100,000. The bonds mature on December 31, 20x4 and pay annual interest of 16%. The bonds can be converted into 10,000 of Zevrek Co.’s ordinary shares with par value of ₱300 per share. On January 1, 20x1, the bonds, without the conversion feature, were selling at a price that reflects a yield rate of 18%. On January 1, 20x3, all the bonds were retired. Zevrek Co. paid a call premium of ₱300,000 on the retirement. On retirement date, the bonds, without the conversion feature, were selling at 105. How much is the gain (loss) on the retirement of the bonds? a. 325,247b. (325,247)c. 125,247 d. 0
On January 1, 20x1, Zevrek Co. issues bonds with face amount of ₱4,000,000 for ₱4,100,000. The bonds mature on December 31, 20x4 and pay annual interest of 16%. The bonds can be converted into 10,000 of Zevrek Co.’s ordinary shares with par value of ₱300 per share. On January 1, 20x1, the bonds, without the conversion feature, were selling at a price that reflects a yield rate of 18%. On January 1, 20x3, all the bonds were retired. Zevrek Co. paid a call premium of ₱300,000 on the retirement. On retirement date, the bonds, without the conversion feature, were selling at 105. How much is the gain (loss) on the retirement of the bonds? a. 325,247b. (325,247)c. 125,247 d. 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
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Pls answer number 8 with solutions
On January 1, 20x1, Zevrek Co. issues bonds with face amount of ₱4,000,000 for ₱4,100,000. The bonds mature on December 31, 20x4 and pay annual interest of 16%. The bonds can be converted into 10,000 of Zevrek Co.’s ordinary shares with par value of ₱300 per share. On January 1, 20x1, the bonds, without the conversion feature, were selling at a price that reflects a yield rate of 18%. On January 1, 20x3, all the bonds were retired. Zevrek Co. paid a call premium of ₱300,000 on the retirement. On retirement date, the bonds, without the conversion feature, were selling at 105. How much is the gain (loss) on the retirement of the bonds?
a. 325,247
b. (325,247)
c. 125,247
d. 0
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