Answered: The portion of proceeds from the sale…

The portion of proceeds from the sale of bonds with detachable stock warrants attributable to the warrants is accounted for as a(n)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 15MC: Stockholders equity consists of which of the following? A. bonds payable B. retained earnings and...

See similar textbooks

Related questions

Q: A corporation recognizes a gain or loss O only when bonds are converted into common stock. when…

A: Redemption of Bond: When interest rates fall dramatically, bond issuers are forced to redeem their…

Q: A bond indenture is a. the amount due at the maturity date of the bonds b. the amount for which the…

A: As per the guidelines, only one question is allowed to be answered. Please upload different…

Q: The Bands which are redeemed only on the liquidation of the company O a Irredeemable Bond Ob…

A: Irredeemable bonds are the bonds which are redeemed only on the liquidation of the company.…

Q: book value method to record the conversion of bonds into common stock.

A: Upon converting the bonds into common stock at book value, there will no profit or loss. This is…

Q: Bonds for which the owners' names are not registered with the ISSUING corporation are called Select…

A: Bearer Bond: A bearer bond is a fixed-income asset in which the holder, or bearer, owns the security…

Q: 5. A gain or loss may arise from which of the following? a. The initial recognition of the debt and…

A: Liabilities are the obligation of the business towards third parties, or two internal employees, or…

Q: n January 1 of the current year, an entity issued bonds at discount. The entity incorrectly used the…

A: Solution: Under effective interest method of bond amortization, discount amortized is increased with…

Q: All institutions and procedures for bringing buyers and sellers of shares, debentures, bonds,…

A: Financial market is called as a place where all securities such as bonds, shares, debentures etc.…

Q: 18. A(n)_ would be an example of a bond issuer, while an individual would be an example of a…

A: The correct answer is: Company: It is because company, being an entity is permitted to raise funds…

Q: Bond issuance costs must be reported separately as deferred charges and charged to expense over the…

A: The costs associated with issuing the bonds are known as bond issue costs. Example - Legal fees,…

Q: 9. At the time of acquisition of a debt investment a. no journal entry is required b. the cost…

A: As we know assets have debit balances and whenever we acquire investment , those investment becomes…

Q: When a company redeems bonds at a premium to carrying value, that activity is usually classified as:…

A: The company issued the bonds to raise funds in the company so that that funds can be utilized in the…

Q: Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding…

A: Solution: Debt securities acquired by a corporation which are accounted for by recognizing…

Q: True (t) or False (f) _____ The board of directors may authorize more bonds than are issued

A: SOLUTIONS- BONDS- IT IS A FIXED INCOME INSTRUMENT THAT REPRESENT THE LOAN MADE BY AN INVESTOR TO A…

Q: The proceeds from a bond issued with detachable share warrants should be accounted for A. entirely…

A: Bonds are known as a cheaper source of finance because their interest is a tax-saving item. share…

Q: All of the following situations will arise to actual disposition except ______________. Question…

A: Actual disposal represents the removal of assets or securities so that it does not reported in the…

Q: Bonds payable are initially recognized at A. issue price minus transaction costs incurred by the…

A: Bonds are the capital market securities that represent a borrowing instrument for the issuer of…

Q: Equity instruments include all of the following, except * A. Preference shares B. Corporate bonds…

A: There are two types of instruments which can be issued by an organisation to raise the fund. These…

Q: Corporate bonds that can be exchanged for shares of the corporation’s common stock ifcertain…

A: Corporate bond: It can be defined as a debt security, usually issued by the public or private…

Q: Market value of the bonds on different dates is as follows: December 31, 2021. December 31, 2022.…

A: C - P1,000,000 No any change up to the date of 2022 .

Q: The proceeds from a bond issued with non-detachable share purchase warrants should be accounted for…

A: Non detachable share purchase warrants are those right to purchase shares that are attached with the…

Q: Which of the following represent the bond issue procedures Select one: a. Board of directors and…

A: Bonds: It refers to a financial instrument used by issuer to borrow money from investors.

Q: Under IFRS, how are convertible debt recorded? Convertible debt is separated into equity component…

A: Solution: Under IFRS, convertible debt are recorded as "Convertible debt is separated into equity…

Q: A corporate bond is a long-term debt instrument indicating that a corporation has borrowed a certain…

A: Long-term debt refers to debt obligations with a maturity of more than one year. Long-term debt is a…

Q: Requirements: a. Compute for the gain (loss) on extinguishment of bonds recognized in the 20x1…

A: Debts: Debt can be defined as the money borrowed by the business entity from any financial…

Q: Long-term debt that matures within one year and is to be converted into shares should be reported…

A: Current Liability: Current liabilities are financial commitments owed by a corporation that are due…

Q: 1. Investments in debt securities are classified for accounting purposes as: A. Financial asset at…

A: Debt investments and equity investments recorded using the cost method are classified as trading…

Q: When the conversion of bonds payable to common stock is recorded under the market value method and…

A: Journal entry will be - bonds payable debit…

Q: Investments in debt securities made to generate trading gains are classified as: Multiple Choice…

A: Investment in securities means to put the money in some securities in order to get returns in…

Q: Requirements: a. Compute for the gain (loss) on extinguishment of bonds t recognized in the 20x1…

A: The question is based on the concept of business accounting.

Q: If share warrants were exercised by the holder of compound financial instrument, liability would…

A: Journal entry: It is the first step of recording transactions of a company. Before this, no other…

Q: :A dicount on bonds payable .Occurs when a corporation issues bonds with a stated rate more than the…

A: A discount on bonds payable is a contra liability account which represents unamortized discount on…

Q: The proceeds from a bond issued with non-detachable share purchase warrants should be accounted for…

A: Bonds are a form of liability for the business, which it needs to pay. It can be in form of amount…

Q: 37. An entity neglected to amortize the premium on outstanding bonds payable. What is the effect of…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: 4. It is a form of security that indicates the holder has proportionate ownership in the issuing…

A: As per Bartleby guidelines, If multiple questions are posted, only the first 3 questions will be…

Q: Allows the issuer to pay off the bonds early at a fixed price. Matures in installments. Secured only…

A: a. Allows the issuer to pay off the bonds early at a fixed price --Callable Bond, Whenever issuer…

Q: The balance in Unamortized Discount on Bonds Payable should be O a. reported separately in the…

A: Unamortized discounts on bonds payable are considered as a decrease in carrying value or book value…

Q: 2. The value of the warrants attached to a debt security (detachable) is accounted as: a) Liability…

A: Warrants are the rights that are attached with the bonds issuance which provides the right to issue…

Q: 47. The balance in Premium on Bonds Payable a. should be reported on the balance sheet as a…

A: The balance in Premium on Bonds Payable is always reported with the bond payable account. In other…

Q: The proceeds from a bond issued with detachable share purchase warrants should be accounted for * O…

A: A bond is an instrument used by the company to take a loan. It is a kind of debt security and…

Q: 4. It is represented by a certificate which is proof of ownership. a. Stocks b. Bonds 5. It grants…

Q: 2. Each of the three categories of investments in debt and equity securities have similar accounting…

A: Answer 2 : Option (c) Recognition of realized gain or losses on sales is the correct answer.

Question

19. The portion of proceeds from the sale of bonds with detachable stock warrants attributable to the warrants is accounted for as a(n)

a. additional paid-in capital account
b. common stock account
c. contra-liability account
d. adjunct-liability account

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Stockholders equity consists of which of the following? A. bonds payable B. retained earnings and accounts receivable C. retained earnings and paid-in capital D. discounts and premiums on bond payable
When the cash proceeds from a bond issued with detachable stock purchase warrants exceed the sum of the par value of the bonds and the fair value of the warrants, the excess should be credited to:a. Additional Paid-in Capitalb. Retained Earningsc. Premium on Bonds Payabled. Detachable Stock Warrants Outstanding
1. When an entity issued bonds payable with detachable share warrants, how will share premium be computed if the share warrants are exercised by the bondholders? (Choose an answer and explain why) a. It is the balance of the share warrants outstanding. b. It is the sum of the share warrants outstanding and total par or stated value of the shares issued. c. It is the difference between the proceeds received based on the exercise price and the total par or stated value of the shares issued. d. It is the difference between the proceeds received based on the exercise price plus the share warrants outstanding and the total par or stated value of the shares issued.
2. The value of the warrants attached to a debt security (detachable) is accounted as: a) Liability b) A part of share capital c)An appropriation of retained earnings d) A separate portion of share premium
q8 The proceeds from a bond issued with detachable share warrants should be accounted forA. entirely as bonds payableB. entirely as shareholders’ equityC. partly as unearned revenue and partly as bonds payableD. partly as liability for bonds payable and partly as shareholders’ equity for the warrants.
12. The costs of issuing debt securities in a business combination are expensed included in the initial measurement of the debt securities issued accounted for like a “discount" on liability Group of answer choices II and III I I, II and III II
When the conversion of bonds payable to common stock is recorded under the market value method and the market value of the common stock exceeds the book value of the bonds at date of conversion, the difference is recorded as a debit to Loss on Conversion. debit to Additional Paid-in Capital−Common Stock. debit to Discount on Bonds Payable. debit to Retained Earnings.
12. All of the following statements regarding available-for-sale debt securities are true, except for a. premiums and discounts are amortizedb. interest revenue may be debited at the time of acquisitionc. the securities will be valued using the lower of cost or market methodd. realized gain or loss is the difference between the amortized cost of the bonds and theproceeds from their sale
T or F -Under generally accepted accounting principles, gain or loss must be recognized on the conversion of bonds into equity securities. -A discount on bond payable is charged to interest expense using the effective interest method.
Stockholders’ equity consists of which of the following?A. bonds payableB. retained earnings and accounts receivableC. retained earnings and paid-in capitalD. discounts and premiums on bond payable
___ 47. The balance in Premium on Bonds Payable a. should be reported on the balance sheet as a deduction from the related bonds payable b. should be allocated to the remaining periods for the life of the bonds by the straight-line method, if the results obtained by that method materially differ from the results that would be obtained by the interest method c. would be added to the related bonds payable on the balance sheet d. should be reported in the paid-in capital section of the balance sheet ____ 48. The excess of sales price of treasury stock over its cost should be credited to a. Treasury Stock Receivable b. Premium on Capital Stock c. Paid-In Capital from Sale of Treasury Stock d. Income from Sale of Treasury Stock
12. Investments in debt securities include all of the following, except for a. U.S. treasury securitiesb. corporate bondsc. preferred stocks that are redeemable at the option of the issuerd. commercial paper