1. On November 16, 2020, Bilbond issued its 10-year, 7% P1,000,000 convertible bonds at 122. The bonds would have sold for P1,154,435 without the conversion feature. The effective interest rate of similar bonds without the conversion feature is 5%. QUESTION: What is the increase in equity on the date of issuance? 2. On January 1, 2020, Kabond issued a 3- year bond with conversion feature, 9% P1,000,000 at par. Without the conversion feature, the bonds would have sold for 89. Interest is payable semi-annually every June 30 and December 31. On May 30, 2021 the bonds were retired for P1,030,000. At retirement date, the bonds were selling at 91 without the conversion feature. QUESTION: How much was the reduction in the bond conversion privilege at retirement date?

1. On November 16, 2020, Bilbond issued its 10-year, 7% P1,000,000 convertible bonds at 122. The bonds would have sold for P1,154,435 without the conversion feature. The effective interest rate of similar bonds without the conversion feature is 5%. QUESTION: What is the increase in equity on the date of issuance? 2. On January 1, 2020, Kabond issued a 3- year bond with conversion feature, 9% P1,000,000 at par. Without the conversion feature, the bonds would have sold for 89. Interest is payable semi-annually every June 30 and December 31. On May 30, 2021 the bonds were retired for P1,030,000. At retirement date, the bonds were selling at 91 without the conversion feature. QUESTION: How much was the reduction in the bond conversion privilege at retirement date?

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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