On January 1, 2021, Kat Company has decided to raise additional capital by issuing P5,000,000 face value, 5 year bonds with interest rate of 12% payable annually on December 31. To help the sale of the bonds, share warrants are issued – one warrant for each P1,000 bond sold. The warrant entitles the holder to purchase 5 shares at P100 per share. The par value of the share is P50. It is reliably determined that the value of the warrants is P30 each time of issuance of the bonds. The bonds are sold for P5,100,000 with warrants but would have sold only at P4,657,000 without warrants with 14% effective yield. On December 31, 2021, 60% of the share warrants were exercised and the remaining warrants expire on April 1, 2022. 1. The total share premium to be credited to share premium – issuance on December 31, 2021 is: 2. The carrying amount of the bonds as of December 31, 2022 is:
On January 1, 2021, Kat Company has decided to raise additional capital by issuing P5,000,000 face
1. The total share premium to be credited to share premium – issuance on December 31, 2021 is:
2. The carrying amount of the bonds as of December 31, 2022 is:
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
