VICO Company had bonds payable with face amount of P5, 000, 000 and carrying amount of P4,800,000. In addition, unpaid interest on the bonds was accrued in the amount of P250, 000. The creditor had agreed to the settlement of the bonds payable in exchange for 50,000 shares of P50 par value. The shares have no reliable measure of fair value. However, the bonds are quoted at P3, 500, 000. What amount should be recorded as share premium from the issuance of the shares?
VICO Company had bonds payable with face amount of P5, 000, 000 and carrying amount of P4,800,000. In addition, unpaid interest on the bonds was accrued in the amount of P250, 000. The creditor had agreed to the settlement of the bonds payable in exchange for 50,000 shares of P50 par value. The shares have no reliable measure of fair value. However, the bonds are quoted at P3, 500, 000. What amount should be recorded as share premium from the issuance of the shares?
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
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Transcribed Image Text:VICO Company had bonds payable with face amount of P5, 000, 000 and carrying amount of
P4,800,000. In addition, unpaid interest on the bonds was accrued in the amount of P250,
000.
The creditor had agreed to the settlement of the bonds payable in exchange for 50,000
shares of P50 par value.
The shares have no reliable measure of fair value. However, the bonds are quoted at P3,
500, 000.
What amount should be recorded as share premium from the issuance of the shares?
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