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What is the carrying value of the compound instruments

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Reference no: EM132523053

On January 1, 2017, Shredder Company issued its 10%, 4-year convertible debt instrument with a face amount of P3,000,000 for P3,500,000. Interest is payable every December 31 of each year. The debt instrument is convertible into 30,000 ordinary shares with a par value of P100. The debt instrument is convertible into equity from the time of issue until maturity. When the debt instruments were issued, the prevailing market rate of interest for similar debt without conversion option is 18%.

  • PV of 8% for an ordinary annuity of P1 after 4 periods 3.3121268
  • PV of 8% after 4 interest periods 0.7350298
  • On December 31, 2019, Shredder Company converted all the debt instruments by issuing 30,000 ordinary shares.

Question 1: What is the carrying value of the compound instruments as of December 31, 2019?

Reference no: EM132523053

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