The below information will be used for the next two questions. A Company issued a bond payable with detachable warrants on the interest payment date
The below information will be used for the next two questions.
A Company issued a bond payable with detachable warrants on the interest payment date as follows.
| Bond payable ($1,000 par value; 400 bonds) | $400,000 |
| Coupon rate | 4.70% |
| Bond issue price | $414,000 |
| The fair value of the bonds after issuance | $390,000 |
| Term | 10 years |
| Number of detachable warrants per bond | 50 |
| The 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?
Step by Step Solution
3.39 Rating (155 Votes )
There are 3 Steps involved in it
Step: 1
Step 1 Calculate the amortized premium for one year Amorti...
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield
13th Edition
9780470374948, 470423684, 470374942, 978-0470423684
