Cove Corp. issued 6% bonds with a maturity value of P6,000,000, together with 100,000 shares of its P5 parvalue ordinary shares, for a combined cash amount of P11,000,000.The market value of Cove's...

Cove Corp. issued 6% bonds with a maturity value of P6,000,000, together with 100,000 shares of its P5 parvalue ordinary shares, for a combined cash amount of P11,000,000.The market value of Cove's shares cannot be ascertained. If the bonds were issued separately, they would have sold for P4,000,000 on an 8% yield to maturity basis.

What amount should Cove report for share premium on the issuance of the shares?

a.P7,000,000

b.P6,500,000

c.P5,000,000

d.P4,500,000