What is the equity component of the convertible debt

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Question - On January 1, 2021, Rowlet Corporation. Issued a 3 year, 8,000, P1,000 convertible bonds at 110. Interest is to be paid annually at the stated coupon rate of 12% every December 31. Each bond is convertible, at the holder's option, into 30, P25 par value common share at any time up to maturity. On the date of issuance, prevailing market interest rate for similar debt without the conversion privilege was 9%. On the same date market price of one common share was P30.

1. What is the equity component of the convertible debt?

2. Assuming that the convertible bonds above were converted on January 1, 2023, how much should be credited to share premium from the equity conversion?

Reference no: EM133145557

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