Chapter 2 - Shareholders' EquityThe Red Carpet Company wants to raise its working capital.After analysis of available alternatives, the company decides toissue 1,500 shares of P30 par preference share capital withdetachable warrants.and warrants sells for P98.2-15.The package of the preference. sharesThe warrants enable the holder topurchase 750 shares of P10 par ordinary shares at P40 perImmediately following the issuance of shares, the sharewarrants are selling at P10 each. Each preference share withoutshare.the warrant sells for P90.REQUIRED:(a)Amount assigned to the preference share and sharewarrants issued.(b)Entry to record the exercise of the warrants, assuming thatonly 80% of the warrants were exercised.2-16. On January 1, 2020, the Red Hot Company established a shareA total of 30,000option plan for its selected senior employees.options were granted that permit said employees to purchase30,000 shares of P20 par ordinary share capital at P35 pershare.and can be exercised anytime from January 1, 2023 throughDecember 31, 2024.Options are exercisable beginning on January 1, 2023At January 1, 2020, the market price for the Red Hot Companyshare option was P8, based on an option pricing model used bythe entity. All, but 2,000 share options, were exercised onDecember 31, 2023.REQUIRED:Computation of compensation expense for years 2020,2021 and 2022.(a)Entries as a result of the foregoing for year 2020 through2023, inclusive.(b)

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2-15. The Red Carpet Company wants to raise its working capital. After analysis of available alternatives, the company decides to issue 1,500 shares of P30 par preference share capital with detachable warrants. and warrants sells for P98. The package of the preference. shares The warrants enable the holder to purchase 750 shares of P10 par ordinary shares at P40 per Immediately following the issuance of shares, the share warrants are selling at P10 each. Each preference share without share. the warrant sells for P90.

2-15. The Red Carpet Company wants to raise its working capital. After analysis of available alternatives, the company decides to issue 1,500 shares of P30 par preference share capital with detachable warrants. and warrants sells for P98. The package of the preference. shares The warrants enable the holder to purchase 750 shares of P10 par ordinary shares at P40 per Immediately following the issuance of shares, the share warrants are selling at P10 each. Each preference share without share. the warrant sells for P90.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

Chapter 2 - Shareholders' Equity
The Red Carpet Company wants to raise its working capital.
After analysis of available alternatives, the company decides to
issue 1,500 shares of P30 par preference share capital with
detachable warrants.
and warrants sells for P98.
2-15.
The package of the preference. shares
The warrants enable the holder to
purchase 750 shares of P10 par ordinary shares at P40 per
Immediately following the issuance of shares, the share
warrants are selling at P10 each. Each preference share without
share.
the warrant sells for P90.
REQUIRED:
(a)
Amount assigned to the preference share and share
warrants issued.
(b)
Entry to record the exercise of the warrants, assuming that
only 80% of the warrants were exercised.
2-16. On January 1, 2020, the Red Hot Company established a share
A total of 30,000
option plan for its selected senior employees.
options were granted that permit said employees to purchase
30,000 shares of P20 par ordinary share capital at P35 per
share.
and can be exercised anytime from January 1, 2023 through
December 31, 2024.
Options are exercisable beginning on January 1, 2023
At January 1, 2020, the market price for the Red Hot Company
share option was P8, based on an option pricing model used by
the entity. All, but 2,000 share options, were exercised on
December 31, 2023.
REQUIRED:
Computation of compensation expense for years 2020,
2021 and 2022.
(a)
Entries as a result of the foregoing for year 2020 through
2023, inclusive.
(b)

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