An entity issued 2,000 convertible bonds. The bonds have a three-year term, and are issued at par with a face value of P1,000
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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?On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.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 ?
- An entity issues 3,000 convertible bonds at the start of year 1 at par. They have a three year term and a face value of $1,000 per bond. Interest is payable annually in arrears at 7% per annum. Each bond is convertible at any time up to maturity into 250 common shares. When the bonds are issued the prevailing market interest rate for similar debt without conversion options is 9%. The relevant discount factors are shown below. Discount factors Year 1 Year 2 Year 3 7% 9% 0.993 0.914 0.871 0.837 0.813 0.766 How is this initially recorded between the debt and equity elements?At the beginning of current year, Jackfrost Company issued 5,000 convertible bonds payable. The bonds have a three-year term and are issued at 110 with a face amount of P1,000 per bond. Interest is payable annually in arrears at a nominal 6% interest rate. Each bond is convertible at anytime up to maturity into 100 ordinary shares with par value of P5. When the bonds are issued, the prevailing market interest rate for similar debt instrument without conversion option is 9%. The present value of 1 at 9% for 3 periods is .77 and the present value of an ordinary annuity of 1 at 9% for 3 periods is 2.53. What amount should be reported as equity component of the original issuance of the convertible bonds payable?At the beginning of current year, Sandy Company issued 5,000 convertible bonds payable. The bonds have a 3 year term and are issued at 110 with a face amount of P1,000 per bond. Interest is payable annually in arrears at a nominal 6% interest rate. Each bond is convertible at anytime up to maturity into 100 ordinary shares with par value of P5. When the bonds are issued, the prevailing market interest rate for similar debt instrument without conversion option is 9%. The present value of 1 at 9% for 3 periods is .77 and the present value of an ordinary annuity of 1 at 9% for 3 periods is 2.53. What amount should be reported as equity component of the original issuance of the convertible bonds payable?
- Uberita Company issued 5,000 convertible bonds at the beginning of the current year. The bonds had a four year term with a stated rate of interest of 6%, and were issued at par with a face value of P1,000 per bond. Interest is payable annually on December 31. Each bond is convertible into 50 ordinary shares with a par value of P10. The market rate of interest on similar nonconvertible bond is 9%. At the issuance date, the amount of P485,000 was credited to share premium from conversion privilege. The bonds were not converted and instead, the entity paid off the convertible bondholders at maturity. What amount should be reported as gain or loss on the full payment of the convertible bonds at maturity?NoleCo issues bonds on January 1, 20X1. The bonds mature ten years from this date and pay interest semi-annually on June 30 and December 31 each year. The face value of the bonds is $500,000 and the coupon/stated rate is 6%. The market rate on the issue date is 5%. The bonds were issued for $538,973. Required: Complete the three parts below. Part A: The interest expense that NoleCo should recognize on June 30, 20X1 is: $13,474 $16,169 $15,000 $12,500 $13,826 Part B: The interest expense that NoleCo should recognize on December 31, 20X1 is: $13,792 $15,000 $13,436 $13,512 $16,123Susan Company issued 5,000 convertible bonds on January 1, 2006. the bonds have a three-year term and are issued at 110 with a face value of P1,000 per bond. Interest is payable annually in arrears at a nominal 6% interest rate. Each bond is convertible at anytime up to maturing into 100 common shares with par value of P5. When the bonds are issued, the prevailing market interest rate of similar debt instrument without conversion option is 9%. Use two decimal points. What is the equity component of the issuance of the convertible bonds on January 1, 2006?
- Irbid Corporation issues 3,000 convertible bonds at January 1, 2018. The bonds have a three year life, and are issued at par with a face value of JOD1,000 per bond, giving total cash proceeds of JOD4,000,000. Interest is payable annually at 6 percent. Each bond is convertible into 250 ordinary shares (par value of JOD1). When the bonds are issued, the market rate of interest for similar debt without the conversion option is 8%. Required: Compute the liability and equity component of the convertible bond on January 1, 2018.NoleCo issues bonds on January 1, 20X2. The bonds mature ten years from this date and pay interest semi-annually on June 30 and December 31 each year. The face value of the bonds is $500,000 and the coupon/stated rate is 8%. The market rate on the issue date is 7%. The bonds were issued for $535,531. Required: Complete the three parts below. Part A: The interest expense that NoleCo should recognize on June 30, 20X2 is: $20,000 $17,500 $18,744 $18,826 $21,421 Part B: The interest expense that NoleCo should recognize on December 31, 20X2 is: $18,686 $20,000 $18,788 $18,700 $17,500 Part C: The carrying value of these bonds on December 31, 20X2 (after the interest payment on that date) is: $533,248 $502,556 $500,000 $538,087 $532,975NoleCo issues bonds on January 1, 20X1. The bonds mature ten years from this date and pay interest semi-annually on June 30 and December 31 each year. The face value of the bonds is $800,000 and the coupon/stated rate is 10%. The market rate on the issue date is 11%. The bonds were issued for $752,198.Required: Complete the three parts below.Part A: The interest expense that NoleCo should recognize on June 30, 20X1 is:$40,000$44,000$37,610$42,112$41,371Part B: The interest expense that NoleCo should recognize on December 31, 20X1 is:$41,295$41,446$40,000$42,206$44,000Part C: The carrying value of these bonds on December 31, 20X1 (after the interest payment on that date) is:$800,000$753,569$755,015$752,198$756,516