Determine total interest expense recorded

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Question - On January 1, 2019, a corporation issued P5,000,000 of 10% convertible bonds at par. The bonds will mature on January 1, 2023 and interest is payable annually every January 1. The bond contract entitles the bondholders to receive 6, P100 par value, ordinary shares in exchange for each P1,000 bond. On the date of issue, the prevailing market rate of interest for similar debts without the conversion option is 9%.

On maturity, the holders of the bonds with total face value of P2,500,000 exercised their conversion privilege. On that date, the bonds were selling at 110 and the ordinary share at P42.

Determine total interest expense recorded in 2021. Round off present value factors to 4 decimal points.

Reference no: EM132964752

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