How much is the carrying value at year two

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Question - On January 1, 2020, Rosal Company issued a 3-year 4,000 convertible bonds at face value of P1,000 per bond. Interest is to be paid annually in arrears at the stated coupon rate of 6%. Each bond is convertible, at the holder's option, into 200 P2 par value ordinary shares at any time up to maturity. On that date of issuance, the prevailing market interest rate for similar debt without the conversion privilege was 9%, on the same date, the market price of one ordinary share was P3. The bonds were converted on December 31, 2021.

 

6%

9%

Present value of 1 for 3 periods

0.83962

0.77218

Present value of an ordinary annuity of 1 for 3 periods

2.67301

2.5313

Present value of an annuity due of 1 for 3 periods

2.83339

2.75911

Required -

1) How much is the amortization in year 2?

2) How much is the carrying value at year 2?

Reference no: EM133050961

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