Chapter 14, Problem 5C

1.a

To determine

Enumerate the difference that prevails in current accounting for original proceeds of the issuance of convertible bonds and of debt instruments with separate warrants to acquire common stock.

b.

To determine

Describe the underlying rationale for the differences explained in requirement 1a.

c.

To determine

Summarize the arguments that are provided for the alternative accounting treatment.

2.

To determine

Provide journal entries for the issuance of the notes and warrants for the cash consideration.