Question
15. On January 1, 2018, Arlene Company issued convertible bonds with a face value of P5,000,000 for P6,000,000. The bonds are convertible into 50,000 shares
15. On January 1, 2018, Arlene Company issued convertible bonds with a face value of P5,000,000 for P6,000,000. The bonds are convertible into 50,000 shares with P100 par value. The bonds have a 5-year life with 10% stated interest rate payable annually every December 31. The fair value of the convertible bonds without conversion option is computed at P5,399,300 on January 1, 2018. On December 31, 2020, the convertible bonds were not converted but fully paid for P5,550,000. On such date, the fair value of the bonds without conversion privilege is P5,400,000 and the carrying amount is P5,178,300. What is the loss on the extinguishment of the convertible bonds on December 31, 2020?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started