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On January 1, 2021, Rowlet Corporation. Issued a 3 year, 8,000, P1,000 convertible bonds at...

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Finance

On January 1, 2021, Rowlet Corporation. Issued a 3 year, 8,000, P1,000 convertible bonds at 110. Interest is to be paid annually at the stated coupon rate of 12% every December 31. Each bond is convertible, at the holders option, into 30, P25 par value common share at any time up to maturity. On the date of issuance, prevailing market interest rate for similar debt without the conversion privilege was 9%. On the same date market price of one common share was P30.

  • What is the equity component of the convertible debt?
  • On the same date market price of one common share was P30. What is the resulting bonds payable carrying value as of December 31, 2021?
  • Assuming that the convertible bonds above were converted on January 1, 2023, how much should be credited to Share premium from the equity conversion?
  • (PVF 4 Decimal)

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