On December 1, 2020, the ABC corporation issued 500 bonds with a par value of $ 1,000 at 9%, at 103. Each bond was sold with a detachable stock warrant that owed the bondholder's right to purchase. 10 ABC common shares for each bond. At the issuance date, the market value of the bonds without the purchase agreements was 95, and the market value of each Purchase Certificate was $ 50. What amount of money received in this issue should be allocated to the initial book value of the bonds payable? a. $500,000. b. $489,250. c. $515,000. d. $484,100.
On December 1, 2020, the ABC corporation issued 500 bonds with a par value of $ 1,000 at 9%, at 103. Each bond was sold with a detachable stock warrant that owed the bondholder's right to purchase. 10 ABC common shares for each bond. At the issuance date, the market value of the bonds without the purchase agreements was 95, and the market value of each Purchase Certificate was $ 50. What amount of money received in this issue should be allocated to the initial book value of the bonds payable? a. $500,000. b. $489,250. c. $515,000. d. $484,100.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On December 1, 2020, the ABC corporation issued 500 bonds with a par value of $ 1,000 at 9%, at 103. Each bond was sold with a detachable stock warrant that owed the bondholder's right to purchase. 10 ABC common shares for each bond. At the issuance date, the market
a. $500,000.
b. $489,250.
c. $515,000.
d. $484,100.
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