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- On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?At the beginning of the current year, Moses Company issued P5,000,000 face amount, 5-year bonds at 109. Each P1,000 bond was issued with 50 detachable share warrants each of which entitled the bondholder to purchase one ordinary share of P5 par value at P25. Immediately after issuance, the market value of each warrant was P5. The stated interest rate on the bonds is 11% payable annually every December 31. However, the prevailing market rate of interest for similar bonds without warrants is 2%. The present value of 1 at 12% for 5 periods is 0.57 and the present value of an ordinary annuity of 1 at 12% for 5 periods is 3.60. What is the initial carrying amount of the bonds payable? a. 5,450,000b. 4,830,000c. 5,000,000d. 4,380,000At the beginning of current year, Uranus Company issued P5,000,000 face amount, 5-year bond at 109. Each P1,000 bond was issued with 50 detachable share warrants, each of which entitled the bondholder to purchase one ordinary share of P5 par value at P25. Immediately after issuance, the market value of each warrant was P5. The stated interest rate on the bonds is 11% payable annually every December 31. However, the prevailing market rate of interest for similar bonds without warrant is 12%. @ 11% @12% PV of a single payment of 1 for 5 periods 0.59 0.57 PV of an ordinary annuity of 1 for 5 periods 3.70 3.60 What is the initial carrying amount of the bonds payable? 4,985,000 b. 4,830,000…
- An entity issued 5,000 10-year bonds, face amount P1,000 per bond, at 105. Each bond is accompanied by one warrant that permits the bondholder to purchase 20 equity shares, par P100, at P110 per share. Assume that the interest payable annually at a nominal rate of 10% per annum. When the bonds are issue, the prevailing market rate of interest for similar bonds without warrants is 12% per annum. Required: Allocate the issue price. SP- warrants outstanding ?At the beginning of current year, Uranus Company issued P5,000,000 face amount, 5-year bond at 109. Each P1,000 bond was issued with 50 detachable share warrants, each of which entitled the bondholder to purchase one ordinary share of P5 par value at P25. Immediately after issuance, the market value of each warrant was P5. The stated interest rate on the bonds is 11% payable annually every December 31. However, the prevailing market rate of interest for similar bonds without warrant is 12%. @ 11% @12% PV of a single payment of 1 for 5 periods 0.59 0.57 PV of an ordinary annuity of 1 for 5 periods 3.70 3.60 What is the initial carrying amount of the bonds payable? 4,985,000 b. 4,830,000…Keir Corporation issues 10%, P5,000,000, 10-year bonds with face value of P1,000 and nondetachable share warrants at 110. Each bond carried one detachable warrant that permits the bondholder to purchase 20 equity shares, par P50, at P55 per share The prevailing market rate of interest for similar bonds without warrants is 12% per annum. On the date of exercise of the warrants, how much is the amount of 'ordinary shares to be recorded?
- On December 30, 2021, First Company issued 5,000 of 8%, 10-year, P 1,000 face value bonds with share warrants at 110. Each bond carried a warrant for one share of First Company at a specified option price of P25 per share. Immediately after issuance, the market value of the bonds without the warrants was P5,400,000 and the market value of the warrants was P600,000. In the December 31, 2021 statement of financial position, what should be reported as carrying amount of bonds payable?At the beginning of current year, Case Company issued P5,000,000 of 12% nonconvertible bonds payable at 103 which In addition, each P1,000 bond was issued with 30 detachable share warrants, each of which entitled the bondholder t purchase, for P50, one ordinary share of Case. Company, par On the date of issuance, the quoted market value of each warrant was P4. The market value of the bonds ex-warrants Problem 7-11 (AICPA Adapted) are due in five years. to value P25. at the time of issuance is 95. 1. What is the carrying amount of the bonds payable date of issuance? on the a. 5,000,000 b. 4,750,000 c. 5,150,000 d. 4,550,000 2. What amount of the proceeds from the bond issue should be recognized as an increase in shareholders' equity? a. 600,000 b. 300,000 c. 200,000 d. 400,000 3. What amount is credited to share premium if all of the share warrants are exercised? a. 4,350,000 b. 3,750,000 c. 4,150,000 d.On July 1, 2022, Mocha Corporation issued P5M of its 10%, 7-year bonds with one detachable share warrant attached to each P1,000 bond. Each warrant provides for the right to purchase 20 shares of P15 par value ordinary for P20 each. The market value of the ordinary share was P 25 each at July 1, 2022. At that time, the bonds without the warrants are selling at 97. The compound financial instrument was sold at 104. What is the bonds issue price allocated to the share warrants outstanding? a.) P350,000 b.) P200,000 c.) P150,000 d.) P0
- On May 1, 2018, Luzon Company issued P2,000,000, 5 year, 10% bonds for P2,300,000. Each P1,000 bonds had two detachable warrants eligible for the purchase of one share of Luzon’s P100 par ordinary share for P120. Without the warrants the bonds are selling at P2,078,000. What amount should Luzon Company recognize as value of the share warrants?ABC Company issued a 3-year,12%, 2,000 of P 1,000 face value bonds with warrants at 98 on January 1, 2020. The nominal rate is payable annually on December 31. When the bonds are issued, the prevailing market rate of interest for similar bonds without warrants is 15% per annum. Each bond is accompanied by a warrant that permits the bondholder to purchase 20 shares of common stock, par P 30, at P45 per share. How much is the amount allocated to warrants to be recognized by ABC Company? (For present value factors, do not round off) A. P 96,993.51 B. P 96,939.51 C. P 99,969.51 D. P 184,109.88On January 1, 20x1, Julius Company issued a three-year, 5,000 convertible bonds at face value of P1,000per bond. Interest is to be paid annually in arrears at the stated coupon rate of 6%. Each bond is convertible,at the holder’s option, into 200, P2 par value ordinary shares at any time up to maturity. On the date ofissuance, the prevailing market interest rate for similar debt without conversion privilege was 9%. On thesame date, the market price of one (1) ordinary share was P3. The bonds were converted on December31, 20x2.REQUIRED: Compute the following:1. The liability component of the convertible debt _____________2. Interest expense for the year ended December 31, 20x2 _____________3. Share premium from issuance of ordinary shares _____________
