Atimonan Company issued 8,000 of its 8%, 10-year P1,000 face value bonds with detachable share warrants at 120. Each bond carried a detachable warrant for two shares of Atimonan's P100 par value ordinary shares at a specified option price of P150. Immediately after issuance, the market value of the bonds ex-warrants was P8,100,000 and the market value of the warrants was P900,000. The issuance of the bonds increased Atimonan's equity by Atimonan Company issued 8,000 of its 8%, 10-year P1,000 face value bonds withdetachable share warrants at 120. Each bond carried a detachable warrant for twoshares of Atimonan's P100 par value ordinary shares at a specified option price ofP150. Immediately after issuance, the market value of the bonds ex-warrants wasP8,100,000 and the market value of the warrants was P900,000. The issuance of thebonds increased Atimonan's equity by

Given: Atimonan Company issued= 8,000 face value bonds=p 1000 bonds ex-warrants = P8,100,000 market…

Answered: ed | bartleby

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2023, BDM Corporation issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond was $500.BDM received $51,400 for the bond issue. The bonds paid interest every December 31 at 8%; the market interest rate for bonds with a comparable level of risk was 8.50%. The bonds were convertible to common shares at a rate of 12 common shares per bond. BDM amortized bond premiums and discounts using the effective interest method, and the company's year-end was December 31. BDM follows ASPE. On January 1, 2024, 20 of the bonds were converted into common shares. On June 30, 2024, another 20 bonds were converted into common shares. The bondholders chose to forfeit the accrued interest on these bonds. On January 1, 2025, when the fair value of the bonds was $30,750 due to a decrease in market interest rates, a conversion inducement of $30/bond was offered to the remaining bondholders to convert their bonds to common shares. All of the remaining 60 bonds…
ABC Corporation has 4,000, 10%, 10-year bonds, face value 1,000, and sold it at 105. Each bond is accompanied by one warrant that permits the bondholder to purchase 20 shares of capital, par 50, at 55 per share, or a total of 80,000 shares. The prevailing market rate of interest for similar bonds without warrants is 12% per annum with which the PV of 1 at 12% for 10 periods is 0.322 and in an ordinary annuity is 5.65 What is the entry to record issuance of the compound instrument and the exercise of the 70% warrants? Assume also the expiration of the 30% warrants and prepare the entry.
Mecca Energy Corp. issued a convertible bond on 1 August 20X9. The 10-year, 5% $16,000,000 bond pays interest semi-annually each 31 July and 31 January. At maturity, each $1,000 bond is convertible into 120 common shares. The bond was issued for $16,640,000. Market interest rates were approximately 6%.(PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.)Required:1. Provide the journal entry to record the initial issuance of the bond.

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