On January 1, 2020, Shredder Company issued its 10% 6 year convertible debt instrument with a face amount of Php 3,000,000 for Php 3,500,000. Interest is payable every December 31 of each year. The debt instrument is convertible into 30,000 ordinary shares with a par value of Php 100. The debt instrument is convertible into equity from the time of issue until maturity. When the debt instruments were issued, the prevailing market rate of interest for similar debt without conversion option is 8%. On December 31, 2021, Shredder Company converted all the debt instruments by issuing 30,000 ordinary shares. Required: 2. What amount should be credited to the share premium account as a result of the conversion? Problem 3: On December 30, 2020, Slim Company leased equipment under a finance lease. Annual lease payments of Php 200,000 are due December 31 for 10 years. The equipments economic life is 10 years and the interest rate implicit in the lease is 10%. The finance lease obligation was recorded on December 30, 2020 at Php 1,350,000, and the first lease payments was made on that date. Required: 3. What amount should Slim include in current liabilities for this finance lease in its December 31, 2020 balance sheet? Problem 4: On January 1, 2020 Helium Corp. entered into a 10-year lease agreement with Balloon, Inc. For industrial equipment. Annual lease payments of Php 100,000 are payable at the end of each yeat. Helium knows that the lessor expects a 10% return on the lease. Helium has a 12% incremental borrowing rate. The equipment is expected to have an estimated life of 10 years. In addition, a third party has guaranteed to pay Balloon a residual value of Php 50,000 at the end of the lease. Required: 4. In Heliums December 31, 2020 balance sheet, What is the carrying amount of the lease obligations?

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