Problem 5 On January 1, 2022, Luffy Company issued 500 of its 5-year, 10% P1,000 face value bonds at 112. Each bond includes a warrant that allows the holder to purchase 20 ordinary shares with par value P100 at P110 per share. The market value of the bond ex-warrant at the time of issuance is 98. The amount assigned to the share warrants outstanding upon issuance is P70,000. Required: (assume the following independent cases): 12. If 60% of the warrants were exercised and the rest were expired, compute for the amount to be credited to Share premium immediately after the exercise of the said warrants. 13. If all warrants were exercise, compute for the amount to be credited to Share premium immediately after the exercise of the said warrants.
Problem 5 On January 1, 2022, Luffy Company issued 500 of its 5-year, 10% P1,000 face value bonds at 112. Each bond includes a warrant that allows the holder to purchase 20 ordinary shares with par value P100 at P110 per share. The market value of the bond ex-warrant at the time of issuance is 98. The amount assigned to the share warrants outstanding upon issuance is P70,000. Required: (assume the following independent cases): 12. If 60% of the warrants were exercised and the rest were expired, compute for the amount to be credited to Share premium immediately after the exercise of the said warrants. 13. If all warrants were exercise, compute for the amount to be credited to Share premium immediately after the exercise of the said warrants.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Problem 5
On January 1, 2022, Luffy Company issued 500 of its 5-year, 10% P1,000 face value bonds at 112.
Each bond includes a warrant that allows the holder to purchase 20 ordinary shares with par value
P100 at P110 per share. The market value of the bond ex-warrant at the time of issuance is 98. The
amount assigned to the share warrants outstanding upon issuance is P70,000.
Required: (assume the following independent cases):
12. If 60% of the warrants were exercised and the rest were expired, compute for the amount
to be credited to Share premium immediately after the exercise of the said warrants.
13. If all warrants were exercise, compute for the amount to be credited to Share premium
immediately after the exercise of the said warrants.
Can you show the solutions? The answers are:
12. 102,000
13. 170,000
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