On January 1, 20x1, an entity issues bonds with face amount of P4,000,000 for P4,100,000. The bonds
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Question:
On January 1, 20x1, an entity issues bonds with face amount of P4,000,000 for P4,100,000. The bonds mature on December 31, 20x4 and pay annual interest of 16%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P300. On January 1, 20x1, the bonds, without the conversion feature, are selling at a price which reflects a yield rate of 18%. All the bonds are converted into ordinary shares on January 1, 20x3.
Requirement: Provide the entries:
A. On January 1, 20x1 to record the issuance of the convertible bonds.
B. On January 1, 20x3 to record the conversion of bonds.
Expert Answer:
In calculating the loss or gains in case the company retires its bonds on premium priced at P3... View the full answer
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