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What is the value of premium or discount on December

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Q1. An entity has an outstanding bond payable amounting to P2,500,000 with accrued interst of P250,000. To settle this debt, the entity issued 1,000, P1,000 par value shares, currently selling at P2,250 per share. The bonds have a current fair value of P3,150,000. Determine the increase in the entity's stockholders' equity.

Q2. On January 1, 2020 ABC Co. issued 10% 3-year bonds with face value of P5,000,000 at 98. Additionally, ABC Co. paid a bond issue cost of P140,000. After consideration of bond issue costs to the initial measurement, the calculated effective interest rate is 12%. The interest is payable annually on December 31. ABC Co. uses the effective interest method in amortizing discount and issue cost. What is the value of premium or discount on December 31, 2020?

Reference no: EM132676308

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