On January 1, 2023, when the fair value of its common shares was $75 per share, Crane Corp. issued $11 million of 9% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into 4 common shares The debentures were issued for $11.5 million. The bond payment's present value at the time of issuance was $9.1 million and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2024, the corporation's common shares were split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2025, when the fair value of the corporation's common shares was $129 per share, holders of 30% of the convertible debentures exercised their conversion option. Crane applies ASPE and uses the straight-line method for amortizing any bond discounts or premiums. (a) Your answer is correct. Prepare the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
On January 1, 2023, when the fair value of its common shares was $75 per share, Crane Corp. issued $11 million of 9% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into 4 common shares The debentures were issued for $11.5 million. The bond payment's present value at the time of issuance was $9.1 million and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2024, the corporation's common shares were split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2025, when the fair value of the corporation's common shares was $129 per share, holders of 30% of the convertible debentures exercised their conversion option. Crane applies ASPE and uses the straight-line method for amortizing any bond discounts or premiums. (a) Your answer is correct. Prepare the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 9P
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Question
Transcribed Image Text:Current Attempt in Progress
On January 1, 2023, when the fair value of its common shares was $75 per share, Crane Corp, issued $11 million of 9% convertible
debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into 4 common shares
The debentures were issued for $11.5 million. The bond payment's present value at the time of issuance was $9.1 million and the
corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On
January 1, 2024, the corporation's common shares were split 2 for 1, and the conversion rate for the bonds was adjusted accordingly.
On January 1, 2025, when the fair value of the corporation's common shares was $129 per share, holders of 30% of the convertible
debentures exercised their conversion option. Crane applies ASPE and uses the straight-line method for amortizing any bond
discounts or premiums.
(a)
Your answer is correct.
Prepare the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented
when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the
amounts. List all debit entries before credit entries.)
Account Titles and Explanation
4
Debit
Credit
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