The proceeds from a bond issued with detachable share warrants should be accounted for A. entirely as bonds payable B. entirely as shareholders’ equity C. partly as unearned revenue and partly as bonds payable D. partly as liability for bonds payable and partly as shareholders’ equity for the warrants.
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q8
The proceeds from a bond issued with detachable share warrants should be accounted for
A. entirely as bonds payable
B. entirely as shareholders’ equity
C. partly as unearned revenue and partly as bonds payable
D. partly as liability for bonds payable and partly as shareholders’ equity for the warrants.
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- If share warrants were exercised by the holder of compound financial instrument, liability would be derecognize a debit to the equity account related to share warrants will be done a credit to the equity account related to share warrants will be done share warrants outstanding account will not be affected. The proceeds from a bond issued with conversion feature should be accounted for entirely as bonds payable entirely as shareholders’ equity partially as unearned revenue and partially as bonds payable partially as shareholders’ equity and partially as bonds payableThe proceeds from a bond issued with non-detachable share purchase warrants should be accounted for entirely as bonds payable entirely as shareholders’ equity partially as unearned revenue and partially as bonds payable partially as shareholders’ equity and partially as bonds payableWhen a company redeems bonds at a premium to carrying value, that activity is usually classified as: a. operating b. financing c. investing
- T or F -Under generally accepted accounting principles, gain or loss must be recognized on the conversion of bonds into equity securities. -A discount on bond payable is charged to interest expense using the effective interest method.2. The value of the warrants attached to a debt security (detachable) is accounted as: a) Liability b) A part of share capital c)An appropriation of retained earnings d) A separate portion of share premiumWhen the cash proceeds from a bond issued with detachable stock purchase warrants exceed the sum of the par value of the bonds and the fair value of the warrants, the excess should be credited to:a. Additional Paid-in Capitalb. Retained Earningsc. Premium on Bonds Payabled. Detachable Stock Warrants Outstanding
- 1. When an entity issued bonds payable with detachable share warrants, how will share premium be computed if the share warrants are exercised by the bondholders? (Choose an answer and explain why) a. It is the balance of the share warrants outstanding. b. It is the sum of the share warrants outstanding and total par or stated value of the shares issued. c. It is the difference between the proceeds received based on the exercise price and the total par or stated value of the shares issued. d. It is the difference between the proceeds received based on the exercise price plus the share warrants outstanding and the total par or stated value of the shares issued.12. The costs of issuing debt securities in a business combination are expensed included in the initial measurement of the debt securities issued accounted for like a “discount" on liability Group of answer choices II and III I I, II and III II4. Boss Co. purchased bonds at a discount in the open market as an investment. The bonds will be held in order to collect their contractual cash flows. Boss should account for these bonds at a. Cost. c. Fair value through OCI. d. Lower of cost or market. b. Amortized cost. 5. According to PFRS 9, on initial recognition, the entity has the option of designating financial assets to be measured at FVPL
- The balance in Unamortized Premium on Bonds Payable should be O a. reported separately in the Current Liabilities section of the talance sheet. O b. added to the face amount of the related bonds payable on the balance sheet, O C. reported in the Paid-In Capital section of the balance sheet. Od. reported on the balance sheet as a deduction from the face amount of the related bonds payable.In the balance sheet, the account, Premium on Bonds Payable, is: OA. classified as a liability account. B. deducted from bonds payable. C. added to bonds payable. OD. A and C:A dicount on bonds payable .Occurs when a corporation issues bonds with a stated rate more than the market rate A O .Occurs when a corporation issues bonds with a stated rate less than the market rate .B O .Is reported under the equity section on the balance sheet.C .Is a contra-asset account.D