What amount should manny credit to premium on bonds

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On May 1, 2015, Manny Company issued P2 million, 20-year, 10% bonds for P2, 120,000. Each P1, 000 bonds had detachable warrant eligible for the purchase of one share of Manny's P50 par ordinary share for P60. Immediately after the bonds were issued, Manny's securities had the following unit fair values:

10% Bond without warrant          P1, 040

Warrant                                      20

Ordinary Share, P50 par                  56

Question 1: What amount should Manny credit to premium on bonds payable on May 1, 2015?

a. P 120,000

b. P 80,000

c. P 40,000

d. P 0

Reference no: EM132577991

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