Reference no: EM133016227
Question - The following are the bond transactions of your audit client, J. Daniel Atlas Co.: On January 1, 2019, J. Daniel Atlas Co. decided to raise additional capital by issuing P3,000,000 face value 5-year bonds with interest rate of 13% payable annually on December 31. To help the sale of the bonds, 25 share warrants are issued for each P1,000 bond sold, each of which entitled the bondholder to purchase one share of P5 par common stock for P25 within the next three years. Immediately after issuance, the market value of each warrant was P4. The bonds are sold at 110 with warrants but would have sold only at P3,213,000 without the warrants with 11% effective yield. 80% of the total warrants were exercised on December 31, 2020. The remaining warrants were not exercised and expired on December 31, 2021. The market value of the common stock on December 31, 2020 and December 31, 2021, respectively is, P30 and P33.
On July 1, 2020, J. Daniel Atlas Co. issued 5,000 of its 6-year, P1,000 face value, 10% convertible bonds dated July 1 at 104, at an effective annual interest rate (yield) of 12% (without the bond conversion privilege). Interest is payable every June 30 and December 31. The bonds are convertible at the investor's option into J. Daniel Atlas Co.'s common stock at a ratio of 10 shares of common stock for each bond. On July 1, 2021, an investor in J. Daniel Atlas Co.'s convertible bonds tendered 2,000 bonds for conversion into 20,000 shares of J. Daniel Atlas Co.'s common stock, which had a fair market value of P105 and a par value of P10 at the date of conversion.
Note: Round off present value factors to four decimal places (x.xxxx). Round off amounts to the nearest peso.
Based on the information above, answer the following:
How much is the share warrants outstanding recognized upon issuance of the bonds on January 1, 2019?
How much is the premium or discount amortization for the year ended December 31, 2019?
How much is the share premium from the issuance of common stock on December 31, 2020?
How much is the interest expense for the year ended December 31, 2020?
How much is the carrying amount of the bonds payable as at December 31, 2020?
How much is the bond conversion privilege recognized upon issuance of the convertible bonds on July 1, 2020?
How much is the share premium from the issuance of common stock on July 1, 2021?
How much is the interest expense for the year ended December 31, 2021?
How much is the carrying amount of the bonds payable as at December 31, 2021?
How much is the increase in shareholders' equity upon the expiry of warrants on December 31, 2021?
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