Year 2020 data: On July 1, 2020, HARVARD CONDI Corporation issued 5,000 of its 6-year, P1,000 face
Question:
Year 2020 data: On July 1, 2020, HARVARD CONDI Corporation issued 5,000 of its 6-year, P1,000 face value, 10% convertible bonds dated July 1 at 104, at an effective annual interest rate (yield) of 12% (without the bond conversion privilege). Interest is payable every June 30 and December 31. The bonds are convertible at the investor’s option into HARVARD CONDI’s common stock at a ratio of 10 shares of common stock for each bond. On July 1, 2021, an investor in HARVARD’s convertible bonds tendered 2,000 bonds for conversion into 20,000 shares of Pimento’s common stock, which had a fair market value of P105 and a par value of P10 at the date of conversion. present value factors to four decimal places (x.xxxx).
Based on the above information, answer the following:
How much is the bond conversion privilege recognized upon issuance o the convertible bonds on July 1, 2020?
How much is the share premium from the issuance of common stock on July 1, 2021?
How much is the interest expense for the year ended December 31, 2021?
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield