1. 2. 3. Tamarisk Corp. issued $18,000,000 par value 10% convertible bonds at 99. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Vaughn Company issued $18,000,000 par value 10% 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. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 11%, $11,000,000 par value bonds were converted into 1,100,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $52,000 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 the conversion using the book value method.
1. 2. 3. Tamarisk Corp. issued $18,000,000 par value 10% convertible bonds at 99. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Vaughn Company issued $18,000,000 par value 10% 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. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 11%, $11,000,000 par value bonds were converted into 1,100,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $52,000 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 the conversion using the book value method.
Chapter16: Tax Research
Section: Chapter Questions
Problem 8DQ
Related questions
Question
Transcribed Image Text:1.
2.
3.
Tamarisk Corp. issued $18,000,000 par value 10% convertible bonds at 99. If the bonds had not been convertible, the
company's investment banker estimates they would have been sold at 95.
Vaughn Company issued $18,000,000 par value 10% 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.
Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 11%,
$11,000,000 par value bonds were converted into 1,100,000 shares of $1 par value common stock on July 1, 2025. On July 1,
there was $52,000 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 the conversion using the book value method.
Transcribed Image Text:No. Account Titles and Explanation
1.
2.
3.
Debit
Credit
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