Accompanying each 1000 bond were 20 warrants each

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Unformatted text preview: 3% 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 14-25 Bonds With Detachable Warrants Assume one-half of the warrants (1,000,000) are exercised when the market value of HTL’s common stock is $30 per share. The exercise price is $25 per common share. HTL (Issuer) Cash 25,000,000 Equity – stock warrants 3,000,000 Common stock 1,000,000 Paid-in capital – common stock 27,000,000 1,000,000 warrants × $25 1,000,000 warrants × $25 $6,000,000 ÷ 2 $6,000,000 ÷ 2 14-26 Option to Report Liabilities at Fair Value Companies have the option to value some or all of Companies their...
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