In 2021, a company issued 6% bonds with a maturity value of P40,000, together with 1,000 shares of its P10 par value ordinary share, for a combined cash amount of P150,000. The market value of the company’s share on that date cannot be ascertained. If the bonds were issued separately, they would have been sold for P35,000 on an 8% yield to maturity basis. Determine the increase in share premium as a result of this transaction.
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34. In 2021, a company issued 6% bonds with a maturity value of P40,000, together with 1,000 shares of its P10 par value ordinary share, for a combined cash amount of P150,000. The market value of the company’s share on that date cannot be ascertained. If the bonds were issued separately, they would have been sold for P35,000 on an 8% yield to maturity basis. Determine the increase in share premium as a result of this transaction.
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- 2. On July 1, 2012, Abysmal Company issued 6% bonds with a maturity value of P6,000,000, together with 10,000 ordinary shares with P50 par value for a combined cash amount of P11,000,000. The market value of the ordinary share cannot be determined. If the bonds were issued separately, the bonds would have sold for P4,000,000 on an 8% yield to maturity basis. What amount should be reported for share premium on the issuance of the ordinary shares? a. 7,500,000 b. 6,500,000 c. 5,500,000 d. 4,500,000AI Tool and Dye issued 8% bonds with a face amount of $160 million on January 1, 2021. The bonds sold for $150 million. For bonds of similar risk and maturity the market yield was 9%. Upon issuance, AI elected the option to report these bonds at their fair value. On June 30, 2021, the fair value of the bonds was $145 million as determined by their market value on the NASDAQ. Will AI report a gain or will it report a loss when adjusting the bonds to fair value? If the change in fair value is attributable to a change in the interest rate, did the rate increase or decrease? Will the gain or loss be reported in net income or as OCI?On January 1, 2021, This Company issues bonds with face amount of P4,000,000 for P4,100,000. The bonds mature on December 31, 2024 and pay annual interest of 16%. The bonds can be converted into 10,000 of This Company's ordinary shares with par value of P300 per share. On January 1, 2021, the bonds, without the conversion feature, were selling at a price that reflects a yield rate of 18%. On January 1, 2023, all the bonds were retired. This Company paid a call premium of P300,000 on the retirement. On retirement date, the bonds, without the conversion feature, were selling at 105. How much is the gain (loss) on the retirement of the bonds? [Put a parenthesis if your answer is a loss. Sample answer for loss: (120000))
- 20. Florence Inc. issued 8,000, 5-year convertible bonds of $2,000 each for $4,000,000 at the beginning of 2021. The bonds have a stated rate of interest of 9% and interest is payable annually. Each bond can be convertible into 100 shares with a par value of $10. The market rate of similar nonconvertible debt is 10%. Determine the fair value of the equity component using the “with-and-without” method is $3,848,288 $2,483,600 $1,365,688 $ 151,712AI Tool and Dye issued 8% bonds with a face amount of $160 million on January 1, 2018. The bonds sold for$150 million. For bonds of similar risk and maturity the market yield was 9%. Upon issuance, AI elected theoption to report these bonds at their fair value. On June 30, 2018, the fair value of the bonds was $145 millionas determined by their market value on the NASDAQ. Will AI report a gain or will it report a loss when adjusting the bonds to fair value? If the change in fair value is attributable to a change in the interest rate, did the rateincrease or decrease? Will the gain or loss be reported in net income or as OCI?1. On January 1, 2020, CHAR Company issued P 10,000,000 convertible bonds with a stated rate of 12% at 110. The principal of the bonds is payable on December 31, 2024. Interest on the bonds is payable annually starting December 31, 2020. Each P 5,000 bond is convertible into 20 ordinary shares of P 50 par. Without the bond conversion privilege, the bonds would have sold to yield 10%. On December 31, 2021, after paying periodic interests, half of the bonds issued were converted to ordinary shares. On October 1, 2023, half of the remaining bonds were retired at 102 plus accrued interest. Without the bond conversion privilege, the bonds are quoted at 101. How much was credited to the share premium- ordinary account at the time of conversion of bonds on December 31, 2021? (For present value factors, do not round off) 2. On January 1, 2021, MAMA Company sold the property to the PAPA Company. There was no established exchange price for the property, and PAPA gave MAMA a P2,000,000…
- 17. On July 1, 2018, Houston Company purchased 8% bonds of Ames Corporation with a par value of $200,000 for $175,000 to yield 10%. The bonds are to be held to maturity and pay interest semiannually on June 30 and December 31. The market value of the bonds on December 31, 2018, was $190,000. Houston should report the bond investment at December 31, 2018, at: a. $ 175,000b. $ 175,750c. $ 182,000d. $ 190,00013. On December 31, 2021, PISTACHIO Company had outstanding ₱20 million face value convertible bonds maturing on December 31, 2024. Interest is payable annually on December 31. Each ₱1,000 bond is convertible into 60 shares of PISTACHIO’s ₱P10 par ordinary shares. The unamortized premium balance on December 31, 2021 is ₱350,000. The balance of Share premium arising from bond conversion privilege is ₱640,000. On this date, assume that on December 31, 2021, PISTACHIO retired the ₱2,000,000 issue at 103. Without the conversion privilege, these bonds would have been sold at 102. How much is the gain or loss on retirement taken to profit or loss?12. On December 31, 2021, PISTACHIO Company had outstanding P20 million face value convertible bonds maturing on December 31, 2024. Interest is payable annually on December 31. Each P1,000 bond is convertible into 60 shares of PISTACHIO's PP10 par ordinary shares. The unamortized premium balance on December 31, 2021 is P350,000. The balance of Share premium arising from bond conversion privilege is P640,000. On this date, an individual holding 2,000 of the bonds exercised the conversion privilege when the market value of PISTACHIO's ordinary share was P18. What is the amount credited to share premium upon conversion of the bonds? * P 1,790,000 P 800,000 P -0 - P 899,000
- The Bradford Company issued 8% bonds, dated January 1, with a face amount of $80 million on January 1, 2021 to Saxton-Bose Corporation. The bonds mature on December 31, 2030 (6 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. to 3. Prepare the journal entries to record the purchase of the bonds by Saxton-Bose on January 1, 2021, interest revenue on June 30, 2021 and interest revenue on December 31, 2021 (at the effective rate). (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No 1 2 3 Date January 01, 2021 Investment in bonds. June 30, 2021 Answer is complete but not entirely correct. General Journal Discount on investment in bonds Cash Cash Discount on investment in bonds Interest revenue December 31, 202 Cash Discount on…On January 1, 2021, Darnell Window and Pane issued $18 million of 10-year, zero-coupon bonds for $5,795,518. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:2. Determine the effective rate of interest.1. & 3. to 5. Prepare the necessary journal entries.3. On April 1, 2020, CASHEW Company sold 12,000 of its ₱1,000 11%, 5-year face value bonds at 96. The bonds are dated April 1, 2020 and interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 31, 2021, CASHEW took advantage of favorable prices of its shares to extinguish all of the bonds by issuing 800,000 shares of its ₱P10 par value ordinary shares. At this time, accrued interest was paid in cash. The company’s shares was selling for ₱30 per share on March 1, 2021. How much is the increase in share premium due to the conversion of CASHEW’s bonds? a. ₱ 4,000,000 b. ₱ 0 c. ₱ 3,616,000 d. ₱ 3,520,000