Fall 2013_Acc 3100_Ch 14

14 30 bondswithdetachablewarrants stock warrants

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Unformatted text preview: ion as equity. 14-30 Bonds With Detachable Warrants Stock warrants provide the option to purchase a specified number of shares of common stock at a specified option price per share within a stated period. A portion of the selling price of the bonds is allocated to the detachable stock warrants. 14-31 Bonds With Detachable Warrants On January 1, 2013, HTL issued $100,000,000 of 8% bonds On January 1, 2013, HTL issued $100,000,000 of 8% bonds due in 2020 at 103 (103% of face value). Accompanying each due in 2020 at 103 (103% of face value). Accompanying each $1,000 bond were 20 warrants. Each warrant permitted the $1,000 bond were 20 warrants. Each warrant permitted the holder to buy one share of $1 par common stock at $25 per holder to buy one share of $1 par common stock at $25 per share. Shortly after issuance, the warrants were listed on the share. Shortly after issuance, the warrants were listed on the stock exchange at $3 per warrant. stock exchange at $3 per warrant. HTL (Issuer) Cash 103,000,000 Discount on bonds payable 3,000,000 Bonds payable Equity – stock warrants 100,000,000 6,000,000 100,000 bonds × 20 warrants × $3 100,000 bonds × 20 warrants × $3 14-32 Bonds With Detachable Warrants Assume one-half of the warrants (1,000,000) are exercised when the market value of HTL’s commo...
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This note was uploaded on 11/19/2013 for the course ACCOUNTING 3100 taught by Professor He during the Fall '10 term at CUNY Baruch.

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