The Highland Company issued bonds with a face value of 500,000. (There are 500 $1,000 bonds.) Attached
Question:
The Highland Company issued bonds with a face value of 500,000. (There are 500 $1,000 bonds.) Attached to each bond are stock warrants giving the holder the right to buy 2 shares of stock at $20 per share. The fair value of the warrants is determined to be $10 per warrant (there are 500 warrants). The fair value of the bonds WITHOUT the warrants is determined to be $490,000.
Required: 1) Pre pare the journal entry (or entries if you use multiple entries) for the issuance of the bonds assuming cash received is $495,000. 2) Pre pare the journal entry (or entries if you use multiple entries) for the issuance of the bonds assuming cash received is $500,000. 3) For Part two above, prepare the journal entry if, two years later, 60% of the warrants are exercised
Intermediate Accounting
ISBN: 978-0470161012
9th Canadian Edition, Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.