When convertible bond are converted to a company's stock, the carrying value of the bonds is transferred to equity accounts and no gain or loss is recorded True or False
Q: Crane Company has $3930000 of 7% convertible bonds outstanding. Each $1,000 bond is convertible into…
A: Explanation: The Amount on Bonds payable and the premium on bonds payable Both are accounted as…
Q: Barry Ltd. issued some convertible bonds to Bennett Ltd. They have a life of three years and pay…
A: Hello, since your question has multiple parts we will solve the first question for you. If you want…
Q: A company repurchased shares for 100.0. They were initially issued for 50.0. The shares are not…
A: Shares repurchase: It is the decision under which the organization purchase its own share from the…
Q: a. Provide the entry for Stonewall Corporation on January 1, 2020, for the bond issuance. b. Provide…
A: Introduction:- Journal entry is the first stage of accounting process. It is used to record business…
Q: book value method to record the conversion of bonds into common stock.
A: Upon converting the bonds into common stock at book value, there will no profit or loss. This is…
Q: The transactions below took place during the year 2020. 1. Convertible bonds payable with a par…
A: Date Account title and explanation Debit ($) Credit ($) 1 Bonds Payable $295,100…
Q: t the date of financial statements, ordinary shares issued would exceed ordinary shares outstanding…
A: Solution Note Dear student as per the Q&A guideline we are required to answer the first question…
Q: Share Premium account is recorded as a credit when- a) Shares are sold higher than par value b)…
A: Shares are issued to shareholders against investment made by them into the business. Shares can be…
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: For each of the unrelated transactions described below, present the entries required to record each…
A: "Since you have asked multiple questions, we will solve first question for you. If you want any…
Q: Clabber Company has bonds outstanding with a par value of $119,000 and a carrying value of $108,700.…
A: Formula: Gain or loss on retirement = carrying value of bonds - bonds call price
Q: On May 1, 2016, Maine Co. issued 10-year convertible bonds at 103. During 2018, the bonds were…
A: Convertible bonds refer to the bonds which can be converted into a definite number of common stocks…
Q: The Share Premium in excess of par account normally arises in the accounting records when? the fair…
A: Share premium is the amount in excess of the par value of the share. Share premium is to be…
Q: Assume these are the only securities Martin owns and that the company accounts for them as trading…
A: Net income is the income which is chargeable to tax for income tax purposes. In the instant case,…
Q: All are true about the corporate stocks except ... a. Represents ownership interest in a corporation…
A: Corporate stocks are a part/ fraction of ownership in a corporation .
Q: A conversion of a face value $1 million convertible bond for $1 million of common stock would most…
A: A conversion of a face value $1 million convertible bond for $1 million of common stock would most…
Q: When treasury shares are reissued at more than the reacquisition cost, the excess of the reissuance…
A: When treasury shares are reissued excess over of purchase cost we will transfer such difference to…
Q: 1. On August 1, 2021, Lane Corporation called its 10% convertible bonds for conversion. The…
A: Comment - Multiple Question Asked. 1) Bond- Bonds is an agreement between the lender and issuer of…
Q: 1) Equity securities can be classified as either current assets or long-term assets. Regardless of…
A: Investment are assets held by enterprises to earn revenue or interest out of it or can be held for…
Q: In an audit of stockholders’ equity which among the following is a correct application of generally…
A: Treasury stock refers to the outstanding stock that is purchased back from stockholders by the…
Q: For each of the unrelated transactions described below, present the entry(ies) required to record…
A: As posted multiple questions, as per our guideline policy we are answering only one question…
Q: 1. A company declared a cash dividend on its ordinary shares in December 2020 payable in January…
A: Hi student Since there are multiple questions, we will answer only first question. Dividend is the…
Q: . Treasury stock is presented on the balance sheet as an asset. a liability. a reduction to equity.…
A: Treasury stock refers to a method used by the organization to repurchase the issued stock. It is…
Q: For each of the unrelated transactions described below, present the entries required to record each…
A: Bonds payable: It is a long term liability to the organization issuing it. It is issued to raise…
Q: onversion (or stock) value What is the conversion (or stock) value of each of the following…
A: Conversion Value refers to the financial worth of securities obtained by exchanging the convertible…
Q: Suppose Google, Inc. called its convertible debt in 2017. Assume the following related to the…
A: Bond $ 3,900,000 Debt Conversion Expense $ 33,000 Discount on Bonds Payable $ 24,000…
Q: Discuss the accounting treatment, if any, that should be given to each of the following items in…
A: Earnings per share EPS is an essential financial metric, which aims to evaluate the profitability of…
Q: Richmond Co. sold convertible bonds at a premium. Interest is paid on May 31 and November 30. On May…
A: Convertible Bonds: Convertible bonds are long-term debts issued by a corporation carrying a fixed…
Q: For each of the unrelated transactions described below, present the entries required to record each…
A: ANSWER 1 : Account title Debit Credit Cash [18,800,000 *0.99] 18,612,000 Discount…
Q: Which of the following is False in regards to Share premium account? a. It will be collected when…
A: Share premium account - Share premium represents that, the amount of premium received in excess of…
Q: For each of the unrelated transactions described below, present the entry required to record the…
A:
Q: For each of the unrelated transactions described below, present the entries required to record each…
A: A bond is a fixed pay instrument issued to represent to an advance made by a financial specialist to…
Q: ry Ltd. issued some convertible bonds to Bennett Ltd. They have a life of three years and pay…
A: Convertible Bonds: Convertible bonds can be defined as a debt instrument issued by a company that…
Q: assume that you purchased a $1,000 convertible corporate bond. Also assume the bond can be converted…
A: Formulas: Conversion Price = Face Value of the Bond / Conversion ratio
Q: Teal Corporation has outstanding 1,900 $1,000 bonds, each convertible into 70 shares of $10 par…
A:
Q: For each of the unrelated transactions described below, present the entries required to record each…
A: In entry 1 ) Bonds payable = $ 18800000 Cash = $ 18800000 * 99% = $ 18612000 Discount on bonds…
Q: 3. Discuss the accounting treatment, if any, that should be given to each of the following items in…
A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: On January 2, 2021, Bramble Corp. issued at par $ 301000 of 6% convertible bonds. Each $1,000 bond…
A: Formula: Bramble's diluted earnings per share = ( Net income + Interest saving ) / weighted average…
Q: f a corporation fails to declare a dividend on cumulative preferred stock in a given year, the div
A: Dividend in arrear represents the company would not be able to generate enough money to distribute…
Q: Based on the presumption in IAS 27, the cost method is applied for equity securities when the…
A: Based on the presumption in IAS 27, the cost method is applied for equity securities when the…
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: 6. On December 31, 2012, Sunshine company showed the following data with respect to its matured…
A: In this question it is given that the fair value of liability is p13,500,000 here the carrying…
Q: General Corporation has the following investments in equity securities at December 31, 2002 (there…
A: Comment - Multiple Question Asked. 1) Journal…
Q: REQUIRED: Prepare the required entry to record the issuance of the ordinary shares under each of the…
A: Journal entries refers to the official book of a company which is used to record the day to day…
Q: Barry Ltd issued some convertible bonds to Bennett Ltd. They have a life of three years and pay…
A: Definition: Convertible Bonds: Convertible bonds can be defined as a debt instrument issued by a…
Q: For each of the unrelated transactions described below, present the entries required to record each…
A: 1. Sage Corp. issued $20,100,000 par value 10% convertible bonds at 98. If the bonds had not been…
Q: or each of the unrelated transactions described below, present the entries required to record each…
A: Bonds are considered a financial instrument used to raise finance for the organization. It is also…
Q: PROBLEM 2 The bank accepted an equity interest in Seal Company in the form of 200,000 ordinary…
A: Fair Value of the Note payable = P2200000 Carrying value of Equity Interest = p 2000000 ( 200000…
Q: For each of the unrelated transactions described below, present the entries required to record each…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
If Answered within 45mins,it would be appreciable!!!
When convertible bond are converted to a company's stock, the carrying value of the bonds is transferred to equity accounts and no gain or loss is recorded
True or False
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- On March 31, 2021, Ashley, Inc.'s bondholders exchanged their convertible bonds for common stock. The book value of these bonds on Ashley's books was less than the fair value but greater than the par value of the common stock issued. If Ashley used the book value method of accounting for the conversion, what is an effect of this conversion?Part employs the book value method to record the conversion of bonds into common stock. If all of Part’s bonds payable had been converted into Part’s common stock on November 30, 2002, the retained earnings would have been: increased reduced unchangedFor each of the unrelated transactions described below, present the entry required to record the bond transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) 1. On August 1, 2021, Wildhorse Corporation called its 10% convertible bonds for conversion. The $6,600,000 par bonds were converted into 264,000 shares of $20 par common stock. On August 1, there was $660,000 of unamortized premium applicable to the bonds. The fair value of the common stock was $20 per share. Ignore all interest payments.2. Sandhill, Inc. decides to issue convertible bonds instead of common stock. The company issues 10% convertible bonds, par $2,900,000, at 97. The investment banker indicates that if the bonds had not been convertible they would have sold at 94.3. Gomez Company issues $7,800,000 of bonds with a coupon…
- Computalog Inc. showed the following on its December 31, 2023, balance sheet: Bonds payable, convertible $ 4,040,000 Less: Unamortized discount 14,544 $ 4,025,456 Required: 1. Assuming the bonds are convertible into 404,000 common shares, journalize the conversion on January 1, 2024, when the market value per common share was $10.25. 2. How will the conversion of bonds into common shares affect the elements of the balance sheet (assets, liabilities, equity)?For each of the unrelated transactions described below, present the entries required to record each transaction. Please fill in all the boxes as shown in the image. 1. Headland Corp. issued $21,400,000 par value 9% convertible bonds at 98. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Sage Company issued $21,400,000 par value 9% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $5. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 10%, $10,000,000 par value bonds were converted into 1,000,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $51,000 of unamortized discount applicable to the bonds, and the company paid an additional $68,000 to the bondholders to induce conversion of all the bonds. The company records…For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Ayayai Corp. issued $ 18,600,000 par value 11% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Pina Company issued $ 18,600,000 par value 11% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $ 5. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 12%, $ 9,300,000 par value bonds were converted into 930,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $ 51,000 of unamortized discount applicable to the bonds, and the company paid an additional $ 78,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.…
- V6. On January 1, Stunt Corp. had outstanding convertible bonds with a face value of $1,000,000 and an unamortized discount of $100,000. On that date, the bonds were converted into 100,000 shares of $1 par stock. The market value on the date of conversion was $12 per share. The transaction will be accounted for with the book value method. By what amount will Stunt’s stockholders’ equity increase as a result of the bond conversion?On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Marin Corp. issued $18,800,000 par value 11% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Headland Company issued $18,800,000 par value 11% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 12%, $10,100,000 par value bonds were converted into 1,010,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $52,000 of unamortized discount applicable to the bonds, and the company paid an additional $75,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.
- On January 1, 2023, ACT Company issued 1,000 of its 10%, 5-year, P 5,000 face value convertible bonds at 110. Each P 5,000 bond is convertible into 10 shares of P 100 par value ordinary shares on the date of maturity. Without the conversion feature, the bonds can be sold at 105. 1. What if before maturity date, bond conversion privilege is fully exercised? Provide the journal entries for each problems and assumptionsWhich of the following is False in regards to Share premium account? a. It will be collected when the issue price is more than the par value of shares b. It will not be shown under current assets in the balance sheet c. It will be shown under the shareholders funds d. It will be collected when the par value of share is more than the issue price Trade receivables of XYZ SAOG company was OMR 16000 on 1st January 2019. A customer has gone bankrupt owing RO 1400, The debt is not expected to be recovered and an adjustment should be made at the end of the year 2019. An allowance for receivables of 5% is to be set up. What will be the Good Trade receivables to be shown under Current Assets on the balance sheet? a. OMR 13870 b. OMR 14600 c. OMR 15270 d. OMR 730Barry Ltd. issued some convertible bonds to Bennett Ltd. They have a life of three years and pay interest to Bennett Ltd. each six months. The convertible bonds will be converted to shares only if Bennett Ltd. makes the decision, at any time in the next three years, that it would prefer to receive shares in Barry Ltd. rather than have its funds repaid. Needs answers to the following; b) Does the probability of converion to equity influence whether the convertible bonds are disclosed as debt or equity? c) If Bennett Ltd. notifies Barry Ltd. that it would like to convert the convertible bonds to shares in Barry Ltd. then will this influence how the convertible bonds are disclosed in the financial statements of Barry Ltd?