On December 1, 2020, the ABC corporation issued 500 bonds with a par value of $ 1,000 at 9%, at 103. Each bond was sold with a detachable stock warrant that owed the bondholder's right to purchase. 10 ABC common shares for each bond. At the issuance date, the market value of the bonds without the purchase agreements was 95, and the market value of each Purchase Certificate was $ 50. What amount of money received in this issue should be allocated to the initial book value of the bonds payable? a. $500,000. b. $489,250. c. $515,000. d. $484,100.
On December 1, 2020, the ABC corporation issued 500 bonds with a par value of $ 1,000 at 9%, at 103. Each bond was sold with a detachable stock warrant that owed the bondholder's right to purchase. 10 ABC common shares for each bond. At the issuance date, the market value of the bonds without the purchase agreements was 95, and the market value of each Purchase Certificate was $ 50. What amount of money received in this issue should be allocated to the initial book value of the bonds payable? a. $500,000. b. $489,250. c. $515,000. d. $484,100.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 11QE
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On December 1, 2020, the ABC corporation issued 500 bonds with a par value of $ 1,000 at 9%, at 103. Each bond was sold with a detachable stock warrant that owed the bondholder's right to purchase. 10 ABC common shares for each bond. At the issuance date, the market
a. $500,000.
b. $489,250.
c. $515,000.
d. $484,100.
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