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ABC Company issued a 3-year,12%, 2,000 of P 1,000 face value bonds with warrants at 98 on January 1, 2020. The nominal rate is payable annually on December 31. When the bonds are issued, the prevailing market rate of interest for similar bonds without warrants is 15% per annum. Each bond is accompanied by a warrant that permits the bondholder to purchase 20 shares of common stock, par P 30, at P45 per share. How much is the amount allocated to warrants to be recognized by ABC Company? (For present value factors, do not round off) A. P  96,993.51 B. P 96,939.51 C. P  99,969.51 D. P 184,109.88

ABC Company issued a 3-year,12%, 2,000 of P 1,000 face value bonds with warrants at 98 on January 1, 2020. The nominal rate is payable annually on December 31. When the bonds are issued, the prevailing market rate of interest for similar bonds without warrants is 15% per annum. Each bond is accompanied by a warrant that permits the bondholder to purchase 20 shares of common stock, par P 30, at P45 per share. How much is the amount allocated to warrants to be recognized by ABC Company? (For present value factors, do not round off) A. P  96,993.51 B. P 96,939.51 C. P  99,969.51 D. P 184,109.88

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 5P: Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and...
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ABC Company issued a 3-year,12%, 2,000 of P 1,000 face value bonds with warrants at 98 on January 1, 2020. The nominal rate is payable annually on December 31. When the bonds are issued, the prevailing market rate of interest for similar bonds without warrants is 15% per annum. Each bond is accompanied by a warrant that permits the bondholder to purchase 20 shares of common stock, par P 30, at P45 per share.

How much is the amount allocated to warrants to be recognized by ABC Company? (For present value factors, do not round off)

A. P  96,993.51

B. P 96,939.51

C. P  99,969.51

D. P 184,109.88

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