How much is the gain or loss on retirement taken to profit

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Problem 1: On December 31, 2021, PISTACHIO Company had outstanding ?20 million face value convertible bonds maturing on December 31, 2024. Interest is payable annually on December 31. Each ?1,000 bond is convertible into 60 shares of PISTACHIO's ?P10 par ordinary shares. The unamortized premium balance on December 31, 2021 is ?350,000. The balance of Share premium arising from bond conversion privilege is ?640,000. On this date, assume that on December 31, 2021, PISTACHIO retired the ?2,000,000 issue at 103. Without the conversion privilege, these bonds would have been sold at 102. How much is the gain or loss on retirement taken to profit or loss?

Option 1: ? 5,000 LOSS

Option 2: ? 25,000 LOSS

Option 3: ? 25,000 GAIN

Option 4: ? 20,000 GAIN

Reference no: EM132998738

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