On January 1,2021, an entity issued 1,000 2-year bonds, face value P1,000, at 102. The bonds contain a conversion privilege that provides for an exchange of a P1,000 bond for 10 Ordinary shares with par value of P20. The bonds are selling at 97 without conversion privilege. The total fair value of conversion option at this date is P60,000. 

What is the initial measurement of conversion option on January 1, 2021?

2. On December 31, 2014, YEN Inc. issued a 3-year P4,500,000 serial bonds payable with 10% interest payable every December 31 starting in 2015. The P4,500,000 bonds is payable through equal annual installment every December 31. The effective interest rate of the bonds is 8%. The bonds are properly classified at financial liability at amortized cost. 

What is the carrying value of bonds payable on December 31, 2016?

3. On November 1, 2014, RICH Inc. issued a 10% P2,000,000 bonds payable at 120. Each 1,000 bond has 10 detachable share warrants with a fair value of P20/warrant. The bonds are trading at 105 without the warrant. Each share warrant can be used to purchase one RICH's ordinary share with P5 par value for P6/share. The bondholders exercised all the warrants on December 31, 2014. 

What is the amount of bond premium/(discount) on November 1, 2014?

Answer rating: 100% (QA)

Initial measurement of conversion option on January 1 2021 The fair value of the conversion option on January 1 2021 is P60000 Since the bonds are con... View the full answer