On June 30, 2019, King Company had outstanding 9%, P5,000,000 face value bonds maturing on June 30,2024. Interest is payable semiannually every June 30 and December 31. On June 30, 2019, after amortizationwas recorded for the period, the unamortized bond premium and bond issue cost were P30, 000 and P50, 000,respectively. On that date, King Company acquired all its outstanding bonds on the open market at 98 andretired them.On June 30, 2019, what amount should King Company recognize as gain before tax on redemption of bonds? On January 1, 20x1, ELABORATE COMPLICATED Co. issued 3-year, 10%, P4,000,000 convertible bondsfor P4,400,000. Principal is due at maturity but interest is payable every year-end. The bonds are convertibleinto 6,000 ordinary shares with par value of P400. At issuance date, the prevailing market rate of interest forsimilar debt without conversion feature is 12%.On December 31, 20x2, all the convertible bonds were retired for P4,000,000. The prevailing rate of intereston a similar debt instrument as of December 31, 20x2 is 11% without the conversion feature.How much is gain (loss) on the extinguishment of the bonds on December 31, 20x2?

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On June 30, 2019, King Company had outstanding 9%, P5,000,000 face value bonds maturing on June 30, 2024. Interest is payable semiannually every June 30 and December 31. On June 30, 2019, after amortization was recorded for the period, the unamortized bond premium and bond issue cost were P30, 000 and P50, 000, respectively. On that date, King Company acquired all its outstanding bonds on the open market at 98 and retired them. On June 30, 2019, what amount should King Company recognize as gain before tax on redemption of bonds?

On June 30, 2019, King Company had outstanding 9%, P5,000,000 face value bonds maturing on June 30, 2024. Interest is payable semiannually every June 30 and December 31. On June 30, 2019, after amortization was recorded for the period, the unamortized bond premium and bond issue cost were P30, 000 and P50, 000, respectively. On that date, King Company acquired all its outstanding bonds on the open market at 98 and retired them. On June 30, 2019, what amount should King Company recognize as gain before tax on redemption of bonds?

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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