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Question

0 $ $ $ 97%Thu 5:30 PM 4 = * Safari Flla Edr View History Bookmarics Develop window Help ... i eclugerumiley.com iCampun WilayPLUS Return to Blackboard WileyPLUS Kiero, Intermediate Accounting, 15e SIDD CALCULATOR PAINTER VERSOON + RNCK ASSIGNMENT RESOURCES Hemswerk Chapter 16 SIN ESTLA 61 Sinf Exercise 10-5 Exercise 16-7 Jilad Inc. has decided to raise additional capital byssuing $176,500 face value of bonds with a coupon rate of 11%. In discussions with investment benkers, it was determined that to help the sale of the bonds, detachable Stock warrants should be issued at the rate of one warrant for cacs $100 band sold. The value of the bonds without the warrants is considered to be $128,960, and the value of the wonants in the marict is 132,240. The bonds sold in the markets. Iesuance for $132.500. (a) What entry should be made at the time of the issuance of the bonds end warants? (Credit account titles are automatically indented when 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.) Account Titles and explanation Txercira 16-14 Level Seminarinn) Screenshot 2017-12.20.55 PM IFRS Multiple noire O IFRS Murile Onaire IFRS Murile Onaire 2017-12...9.59 PM IFAS Nubile Onaire IFRS Muir Choire (b) Prepere the entry r the wTants were nondetachable. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Account Titles and explanation Review Score Review Results hy study Objective 2017-12..0.03 PM SION LIST OF ACCOUNTS Screen Shot 2017-12..0.0 PM Question Attemptsi 0 or 3 used SAVE POR LATEN GURNIT ANSWER 900@ 029 BI

Explanation / Answer

a. Answer:-

Basic Formulas:-

1. (Value of bonds without warrants ÷ value of bonds wit out warrants + value of warrants) × Issue price = value assigned to bonds

2. (Value of warrants ÷ value of bonds without warrants +value of warrants) × Issue Price = Value assigned to warrants

Value assigned to bonds = ($128950÷$161190) × $132500 = $105998

Value assigned to warrants = ($32240÷$161190) × $132500 = $26502

Journal Entry:-

b Answer :- when the warrants are non-detachable, seperate recognition is not given to the warrants. The accounting treatment parallels that given convertible debt because the debt and equity element cannot be separated.

Journal entries:-

Particulars Debit ($) Credit ($) Cash 132500 Discount on Bonds Payable ($176500 - $105998) 70502 Bonds payable 176500 Paid in capital - stock warrants 26502

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