Reference no: EM132539488

Point 1: On January 1, 2018, Arlene Company issued convertible bonds with a face amount of P5,000,000 for P6,000,000.

Point 2: The bonds are convertible into 50,000 shares with P100 par value. The bonds have a 5-year life with 10% stated interest rate payable annually every December 31.

Point 3: The fair value of the convertible bonds without conversion option is computed at P5,399,300 on January 1, 2018.

Point 4: On December 31, 2020, the convertible bonds were not converted but fully paid for P5,550,000.

Point 5: On such date, the fair value of the bonds without conversion privilege is P5,400,000 and the carrying amount is P5,178,300.

Question 1: What is the carrying amount of bonds payable on January 1, 2018?

Question 2: What is the premium on bonds payable on January 1, 2018?

Question 3: What is the equity component arising from issuance of bonds payable on January 1, 2018?

Question 4: What is the loss on the extinguishment of the convertible bonds payable on December 31, 2020?