Answered: On January 1 , 2021, NAGAGA COmpany…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 9P

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On January 1 , 2021, NAGAGA COmpany issued 3-year, 4,000 convertible bonds at face value of P1,000 bond. Interest is to be paid annually in arrears at the stated coupon rate of 6%. Each bond is convertible, at the holder's option, into 200 P2 par value ordinary shares at any time up to maturity. On the date of issuance, the prevailing market interest rate for similar debt without the conversion privilege ws 9%. On the same date, the market price of one ordinary share was P3. The bonds were converted December 31, 2022.

(Use 5 decimal places in your present value factors, if necessary)

***Round off to the nearest one.

The increase in the Shareholders' Equity of the balance sheet is

The interest expense to be reported in the income statement for the year ended December 31, 2022 is

The liability component of the convertible debt is

The equity component of the convertible debt is

The carrying value of the bonds on the prior to the date of conversion is *

The total consideration for the issuance of shares upon conversion is

The total par value of ordinary shares issued upon conversion is

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