Problem 9-4 (IAA) Equity Swap Sunshine Company showed the following data with respect to a matured obligation: Mortgage payable grot 5,000,000 Aarued interest payable 500,000 5.5M The entity is threatened with a court suit if it could not pay its maturing debt. Accordingly, the entity entered into an agreement with the creditor for the issuance of share capital in full settlement of the mortgage. The agreement provided for the issue of 35,000 shares with par value of P100. The share is currently quoted at P130. The fair value of the liability is P4,700,000. Required: Prepare journal entry to record the equity swap on the books Sunshine Company: swap I the fair value of the share capital is used for the equity ll the fair value of the liability is used for the equity swap. * If the carrying amount of the liability is used for the equity swap