On 1 January 2012, Entity A issued a 10 per cent convertible debenture with a face value of P1,000,000 maturing on 31 December 2021. The debenture is convertible into ordinary shares of Entity A at a conversion price of P25 per share. Interest is payable half-yearly in cash. At the date of issue, Entity A could have issued nonconvertible debt with a ten-year term bearing a coupon interest rate of 11 per cent. On 1 January 2017, to induce the holder to convert the convertible debenture promptly, Entity A reduces the conversion price to P20 if the debenture is converted before 1 March 2017 (ie within 60 days). The market price of Entity As ordinary shares on the date the terms are amended is P40 per share. Compute the amount to be recognized in profit or loss as a result of the amendment of the terms.

P50,000

P200,000

P 0

P400,000