What is the equity component of the issuance of the convertible bonds on January 1, 2019? What amount of share premium should be recognized on conversion of bonds into share capital?
Delilah Holdings issued a 4-year P2,500,000 face
It is reliably ascertained that the bonds would sell at P2,350,000 without the conversion feature with an effective yield of 14%. Each P1,000 bond is convertible into 10 shares of P100 par value share capital.
On December 31, 2019, the entire bond issue was converted into share capital, and on this date, the share has a market value of P150 and the bonds are quoted at 101.
What is the equity component of the issuance of the convertible bonds on January 1, 2019?
What amount of share premium should be recognized on conversion of bonds into share capital?
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