Question
The below information will be used for the next two questions. A Company issued a bond payable with detachable warrants on January 1, 20X1 as
The below information will be used for the next two questions.
A Company issued a bond payable with detachable warrants on January 1, 20X1 as follows. All bonds are interest due annually with the bond due at maturity.
| Bond payable ($1,000 par value; 400 bonds) | $400,000 |
| Coupon rate | 4.70% |
| Bond issue price | $414,000 |
| Fair value of the bonds after issuance | $390,000 |
| Term | 10 years |
| Number of detachable warrants per bond | 50 |
| Fair value of the warrants after issuance | $2.00 |
| Stock purchase price | $15.00 |
| Warrants exercised | 5,000 |
1 warrant = 1 share of $1 par value stock
What is interest expense in 20X1?
THE ANSWER IS NOT 18,800 or 188,000!!!
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Food Hygiene Auditing
Authors: N. Chesworth
1997th Edition
1461380545, 978-1461380542
