On January 1, 2017, Entity A issues convertible bonds with a maturity of five years....
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On January 1, 2017, Entity A issues convertible bonds with a maturity of five years. The issue is for a total of 1,000 convertible bonds. Each bond has a par value of P1,000, a stated interest rate is 5% per year, and is convertible into 5 ordinary shares of Entity A. The convertible bonds were issued to Entity O at par. The per-share price for an Entity A share is P15. Quotes for similar bonds issued by Entity A without a conversion option (i.e., bonds with similar principal and interest cash flows) suggest that they can be sold for P900,000.
The issuance of convertible bonds increased Entity As equity by
Group of answer choices
P76,923
P 0
P100,000
P75,000
Answer & Explanation
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