Reference no: EM133031193
Question - On January 1, 2020, MC Company acquired 25% of the ordinary shares that carry voting rights at a general meeting of shareholders of DC Company for P400,000.The purchase price is equal to the fair value of the 25% of DC's identifiable assets less 25% of its identifiable liabilities. For the year ended 2020, DC Company recognized a loss of P2,400,000. MC Company has no constructive or legal obligation in respect of its associate and has made no payment on its behalf.
For the year ended 2021, DC Company recognized a profit of P3,200,000. What is the carrying value of MC investment in DC as of December 31, 2021?
On January 1, 2019, Yellow Company issued its P3,000,000, 8%, 5-year bonds that resulted in a bond conversion privilege of P100,000. The bonds are convertible to 20,000 ordinary shares with a par value of P100 per share.
On April 1, 2021,P1,200,000 bonds were converted to ordinary shares when the ordinary shares sell for P125 per share.
What the conversion of the bonds to ordinary shares shall result to a net increase in share premium?