Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

21. A US company issues convertible bonds for $ 104,000. The par value of the bonds is $ 100,000. The market value of the option

21. A US company issues convertible bonds for $ 104,000. The par value of the bonds is $ 100,000. The market value of the option to convert the bonds is estimated at $ 6,000. The company will recognize in its books, when issuing the bonds:

a. Bond debt of $ 104,000, including a premium of $ 4,000 b. $ 98,000 bond debt, including a $ 2,000 discount and $ 6,000 equity c. $ 100,000 bond debt and $ 4,000 equity d. None of the above.

22. Refer to the previous question. The bonds are not convertible, but have capital warrants. The market value of the cdulas, separated from the bonds is $ 6,000. The company will recognize in its books, when issuing the bonds:

a. Bond debt of $ 104,000, including a premium of $ 4,000 b. $ 98,000 bond debt, including a $ 2,000 discount and $ 6,000 equity c. $ 100,000 bond debt and $ 4,000 equity d. None of the above.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sound Investing, Chapter 5 - Cost Allocation

Authors: Kate Mooney

8th Edition

007171927X, 9780071719278

More Books

Students also viewed these Accounting questions