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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education