On January 1, 2020 AAA Company issued 6,000 convertible bonds with P1,000 face amount per bond....

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On January 1, 2020 AAA Company issued 6,000 convertible bonds with P1,000 face amount per bond. The bonds have a three year life and are issued at 105. Interest is payable annually at 6% every December 31. Each bond is convertible into 20 ordinary shares with P50 par value. When the bonds are issued the market price for similar bonds without conversion option is 8%. (Note PV factor - ROUND OF TO FOUR DECIMAL PLACES, ALL OTHER AMOUNTS MUST BE IN WHOLE NUMBER). 1. How much is the carrying amount of bonds payable at the date of issuance? 2. How much is the amount to be credited to equity account at the date of issuance? 3. If all the bonds are converted on December 31, 2020 how much will be the amount to be credited to Share premium - issuance? 4. If all the bonds are not converted, how much will be credited to cash on the date of maturity!! On January 1, 2020 AAA Company issued 6,000 convertible bonds with P1,000 face amount per bond. The bonds have a three year life and are issued at 105. Interest is payable annually at 6% every December 31. Each bond is convertible into 20 ordinary shares with P50 par value. When the bonds are issued the market price for similar bonds without conversion option is 8%. (Note PV factor - ROUND OF TO FOUR DECIMAL PLACES, ALL OTHER AMOUNTS MUST BE IN WHOLE NUMBER). 1. How much is the carrying amount of bonds payable at the date of issuance? 2. How much is the amount to be credited to equity account at the date of issuance? 3. If all the bonds are converted on December 31, 2020 how much will be the amount to be credited to Share premium - issuance? 4. If all the bonds are not converted, how much will be credited to cash on the date of maturity!!

Answer rating: 100% (QA)

1 The carrying amount of the bonds payable at the date of issuance can be calculated as follows Face amount of bonds 6000 x 1000 P6000000 Issue price ... View the full answer