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Aviator Company had bonds payable with face amount of P10,000,000 and a carrying amount of...

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Accounting

Aviator Company had bonds payable with face amount of P10,000,000 and a carrying amount of P9,600,000. In addition, unpaid interest on the bonds was accrued in the amount of P500,000. The creditor had agreed to the settlement of the bonds payable in exchange for 50,000 shares of P100 par value. The shares have no reliable measure of fair value. However, the bonds are quoted at P7,000,000. What amount of share premium should be recognized as a result of the equity swap?

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