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On June 30, year 4. Ariadne, Inc. issued 2,500 of its 6%, ten-year, $1,000 face value bonds with detachable stock warrants at par. Each bond
On June 30, year 4. Ariadne, Inc. issued 2,500 of its 6%, ten-year, $1,000 face value bonds with detachable stock warrants at par. Each bond carried a detachable warrant for one share of Ariadne's common stock at a specified option price of $24 per share. Immediately after issuance, the market value of the bonds without the warrants was $2,250,000 and the market value of the warrants was $305,000. In its December 31, year 4 balance sheet, what amount should Ariadne report as bonds payable, net of discount or premium? Assume straight-line amortization. A. $2,216,565 (20%) B. $2,216,487 (33%) C. $2,195,000 (35%) D. $1,975,500 (10%)
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