On July 1, 2020, Shake Corporation issued P5,000,000 of its 10%, 7-year bonds with one detachable warrant attached to each P1,000 bond. Each warrant provides for the right to purchase 20 shares of P15 par value ordinary for P20 each. The market value of the ordinary share was P25 each at July 1, 2020. At that time, the bonds without the warrants are selling at 97. The compound financial instrument was sold at 104. 1. What is the bond issue price allocated to the debt? A. 5,200,000 B. 350,000 C. 5,000,000 D. 4,850,000 2. Using that data and assuming that all warrants are exercised and recorded in the accounts, how much is the amount credited to share premium? A. 350,000 B. 530,000 C. 850,000 D. 500,000
On July 1, 2020, Shake Corporation issued P5,000,000 of its 10%, 7-year bonds with one detachable warrant attached to each P1,000 bond. Each warrant provides for the right to purchase 20 shares of P15 par value ordinary for P20 each. The market value of the ordinary share was P25 each at July 1, 2020. At that time, the bonds without the warrants are selling at 97. The compound financial instrument was sold at 104.
1. What is the
A. 5,200,000
B. 350,000
C. 5,000,000
D. 4,850,000
2. Using that data and assuming that all warrants are exercised and recorded in the accounts, how much is the amount credited to share premium?
A. 350,000
B. 530,000
C. 850,000
D. 500,000
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