The issue price of the 3,000 5-year, P1,000 face value bonds on January 1, 2021 is The carrying amount of the 3,000 5-year, P1,000 face value bonds on December 31, 2021 is The gain on early retirement of bonds on December 31, 2022 is
Use the following information for the next 5 items:
On January 1, 2021, Ocean Corporation issued 3,000 of its 5-year, P1,000 face value, 11% bonds dated January 1 at an effective annual interest rate (yield) of 9%. Interest is payable each December 31. Thunder uses the effective interest method of amortization. On December 31, 2022, the 3,000 bonds were extinguished early through acquisition in the open market by Ocean Corporation for P3,090,000 including accrued interest.
On July 1, 2021, Ocean issued 5,000 of its 6-year, P1,000 face value, 10% convertible bonds at par. Interest is payable every June 30 and December 31. On the date of issue, the prevailing market interest rate for similar debt without the conversion option is 12%. On July 1, 2022, an investor in Ocean’s convertible bonds tendered 1,500 bonds for conversion into 15,000 ordinary shares of Thunder, which had a fair value of P105 and a par value of P1 at the date of conversion.
Based on the above and the result of your audit, determine the following: (Round off present value factors to four decimal places and final answers to the nearest peso.)
- The issue price of the 3,000 5-year, P1,000 face
value bonds on January 1, 2021 is - The carrying amount of the 3,000 5-year, P1,000 face value bonds on December 31, 2021 is
- The gain on early retirement of bonds on December 31, 2022 is
- The issuance of the 6-year, P1,000 face value bonds on July 1, 2021 increased equity by
- The conversion of the 1,500 6-year, P1,000 face value bonds on July 1, 2022 increased share premium by
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