Reference no: EM133062931

Questions -

Q1. In April 1, 2021, Pink issued P3M, of 10% nonconvertible bonds at 102 that are due on March 31, 2026. Each P1,000 bond was issued with 40 detachable stock warrants, each of which entitled the bondholders to purchase one share of Pink P10 par ordinary share for P25. On April 1, 2021, the market value of Pink's ordinary was P 20 per share, and the market value of the bonds ex-warrant was P97. What is the assigned value of the ordinary stock warrants?

a. P150,000

b. P75,000

c. P90,000

d. P60,000

Q2. On June 30, 2019, Gray Co. had outstanding 9%, P10M face value bonds, maturing on June 30, 2024. Interest was payable semi-annually every June 30 and December 31. On June 30, 2019, after amortization was recorded for the period, the unamortized bond premium and bond issue costs were P60,000 and P100,000 respectively. On that date, Gray acquired all its outstanding bonds on the open market at 98 and retired them. At June 30, 2019, what amount should Gray recognized as gain on redemption of bonds?

a. 160,000

b. 40,000

c. 240,000

d. 360,000