Explanation Bond: Bond is a debt security which fetches the bondholders a fixed specified interest on the bonds till maturity. Recommendations to the head accountant: As per the execution of financial restructuring, the following items are exchanged for 10% bonds with outstanding face value of $185,000 and book value of $210,000: a. Cash of $23,125 ( $125×185 bonds ) b. 7% Preferred shares of $111,000 ( $100 par value×185 bonds × 6 shares ) c. Additional paid-in capital on preferred stock of $6,660 ( ( $106 sale price–$100 par value ) ×185 bonds × 6 shares ) d. Warrants of $46,250 ( $5 par value×185 bonds × 50 shares ) FASB ASC 470-20-25-2, FASB ASC 470-20-25-3, and FASB ASC 470-20-25-13 deal with the conversion of debt into detachable warrants. FASB ASC 405-20, FASB ASC 470-50 also deals with conversion of liabilities. FASB ASC 405-20-40-1 and FASB ASC 405-20-40-2 deal with the De-recognition of debtor and reacquisition of stock while debt is extinguished. FASB ASC 310-40-15-2 and FASB ASC 470-60-35-4 deal with conversion of debt into equity securities. FASB ASC 225-20-45-16 deal with the gains or losses associated with the extinguishment of debt. Journal entry to record the bond extinguishment transaction: Date Account Titles and Explanation Post Ref

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ISBN: 9781337909402

Author: PAGACH

Publisher: VST

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Chapter 15, Problem 13C

Chapter 16, Problem 1GI

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Chapter 15 Solutions

EBK INTERMEDIATE ACCOUNTING: REPORTING

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Ch. 15 - Prob. 11GI Ch. 15 - Prob. 12GI Ch. 15 - Prob. 13GI Ch. 15 - Prob. 14GI Ch. 15 - Prob. 15GI Ch. 15 - Prob. 16GI Ch. 15 - Prob. 17GI Ch. 15 - Prob. 18GI Ch. 15 - Prob. 19GI Ch. 15 - How is a preferred stock similar to a long-term...Ch. 15 - Prob. 21GI Ch. 15 - Prob. 22GI Ch. 15 - Prob. 23GI Ch. 15 - Prob. 24GI Ch. 15 - Prob. 25GI Ch. 15 - What additional disclosures about preferred and...Ch. 15 - Prob. 1MC Ch. 15 - Cary Corporation has 50,000 shares of 10 par...Ch. 15 - What is the most likely effect of a stock split on...Ch. 15 - Prob. 4MC Ch. 15 - Prob. 5MC Ch. 15 - Prob. 6MC Ch. 15 - Prob. 7MC Ch. 15 - When treasury stock is purchased for cash at more...Ch. 15 - Preferred stock that may be retired by the...Ch. 15 - When treasury stock accounted for by the cost...Ch. 15 - Brown Corporation issues 800 shares of its 5 par...Ch. 15 - Heart Corporation entered into a subscription...Ch. 15 - Blue Corporation issues 200 packages of securities...Ch. 15 - Sun Corporation issues 500 shares of 8 par common...Ch. 15 - Next Level Morgan Corporation issues 500 packages...Ch. 15 - Prob. 6RE Ch. 15 - On January 1, 2019, Phoenix Corporation adopts a...Ch. 15 - On January 2, 2019, Brust Corporation grants its...Ch. 15 - Prob. 9RE Ch. 15 - Assume Cole Corporation originally issued 300...Ch. 15 - Violet Corporation issues 1,200 shares of 150 par...Ch. 15 - Assume that Lily Corporation has outstanding 1,500...Ch. 15 - Tulip Corporation uses the cost method to account...Ch. 15 - Par Value and No-Par Stock Issuance Caswell...Ch. 15 - Combined Sale of Stock Maxville Company issues 300...Ch. 15 - Sale of Stock with Bonds Pilsen Company issues 12%...Ch. 15 - Issuance of Stock for Land Putt Company issues 500...Ch. 15 - Prob. 5E Ch. 15 - Prob. 6E Ch. 15 - Prob. 7E Ch. 15 - Prob. 8E Ch. 15 - Restricted Share Units On January 2, 2019, Dekker...Ch. 15 - Prob. 10E Ch. 15 - Convertible Preferred Stock On January 2, 2019,...Ch. 15 - Prob. 12E Ch. 15 - Stock Rights with Preferred Stock Nelson...Ch. 15 - Various Journal Entries Lodi Company is authorized...Ch. 15 - Treasury Stock, Cost Method On January 1, Lorain...Ch. 15 - Contributed Capital Adams Companys records provide...Ch. 15 - Prob. 17E Ch. 15 - Treasury Stock, Cost and Par Value Methods On...Ch. 15 - Treasury Stock, No Par Propst-Steele Production...Ch. 15 - Subscriptions On August 3, 2019, the date of...Ch. 15 - Prob. 2P Ch. 15 - Prob. 3P Ch. 15 - Prob. 4P Ch. 15 - Prob. 5P Ch. 15 - Prob. 6P Ch. 15 - Issuances of Stock Cada Corporation is authorized...Ch. 15 - Issuances of Stock Epple Corporation is authorized...Ch. 15 - Comprehensive Young Corporation has been operating...Ch. 15 - Comprehensive The shareholders equity section of...Ch. 15 - Treasury Stock Analysis Ray Holt Corporation has...Ch. 15 - Comprehensive Byrd Companys Contributed Capital...Ch. 15 - Prob. 13P Ch. 15 - Prob. 14P Ch. 15 - Reconstruct Journal Entries At the end of its...Ch. 15 - Treasury Stock, Cost Method Bush-Caine Company...Ch. 15 - Prob. 17P Ch. 15 - Prob. 1C Ch. 15 - Prob. 2C Ch. 15 - Prob. 3C Ch. 15 - Capital Stock Capital stock is an important area...Ch. 15 - Treasury Stock A corporation sometimes engages in...Ch. 15 - Prob. 6C Ch. 15 - Prob. 7C Ch. 15 - Compensatory Share Option Plan Tom Twitlet,...Ch. 15 - Prob. 9C Ch. 15 - Treasury Stock For numerous reasons, a corporation...Ch. 15 - Prob. 11C Ch. 15 - Prob. 12C Ch. 15 - Prob. 13C Ch. 15 - Prob. 14C

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