Reference no: EM132519330

On July 1, 2020, Glamorous Corporation issued 11% bonds in the face amount P2,000,000 that mature on June 30,2024. The bonds were issued to yield 5% and interest is payable every January 1 and July 1. Glamorous Corporation uses the effective interest method of amortizing bond premium or discount. The following are the present value factors:

PV of 5% for an ordinary annuity of P1 after 8 periods 6.463

PV of 5% after 8 interest periods 0. 677

Question 1: What is the carrying value of the debt instruments as of December 31, 2020?

A. P2,043,640

B. P2,051,086

C. P2,058,176

D. P2,064,930

On January 1, 2018, Trader Company issued its 8%, 4-year convertible debt instrument with a face amount of P6,000,000 for P5,900,000. Interest is payable every December 31 of each year. The debt instrument is convertible into 50,000 ordinary shares with a par value of P100. When the debt instruments were issued, the prevailing market rate of interest for similar debt without conversion options is 10%.

PV of 10% for an ordinary annuity of P1 after 4 periods 3.169865

PV of 10% after 4 interest periods 0.683013

Question 2: What is the amortized cost of the debt as of December 31, 2020?

A. P5,619,616

B. P5,701,578

C. P5,791,735

D. P5,890,909

Question 3: What is the amount of interest expense for the year ended December 31,2019?

A. P561,962

B. P570,158

C. P579,173

D. P589,091