Chapter 16 Acct part 2

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On April 1 , 2020 , RL Enterprises issued $ 150,000 of 8 % nonconvertible bonds at 104. Bonds are due on March 31 , 2040. Each $ 1,000 at 95 without the warrant , how much should RL record as paid - in capital from the warrants ? for $ 50 . On the date of issue , the fair value of the stock was $ 40 per share and the fair value of the warrants was $ 2 . if RL's bonds sell bond was issued with 25 detachable stock warrants entitling the bondholder to purchase one share of common stock ( par value $ 25 )

$ 7,800

When recording the conversion of bonds to common stock , there will always be a debit to and a credit to

- Bonds Payable ; Common Stock .

Sweetener

. The additional consideration offered by an issuer thatwishes to set up an induced conversion

Stock warrants

.Certificates entitling the holder to acquire shares of stockat a certain price within a stated period

The accounting for convertible debt involves reporting issues at the time of (

1 ) issuance , ( 2 ) conversion , and ( 3 ) retirement

Complex capital structures and dual presentation of EPS require the following additional disclosures in note form .

1. Description of pertinent rights and privileges of the various securities outstanding . 2. A reconciliation of the numerators and denominators of the basic and diluted per share computations , including individual income and share amount effects of all securities that affect EPS . 3. The effect given preferred dividends in determining income available to common stockholders in computing basic EPS . 4. Securities that could potentially dilute basic EPS in the future that were excluded in the computation because they would be antidilutive . 5. Effect of conversions subsequent to year - end , but before issuing statements

Stock Compensation Plans Disclosure of Compensation Plans Company with one or more share - based payment arrangements must disclose :

1. Nature and extent of such arrangements . 2. Effect on the income statement of compensation cost 3. Method of estimating the fair value of the goods or services received , or the fair value of the equity instruments granted ( or offered to grant ) . 4. Cash flow effects .

Restricted Stock Major Advantages :

1. Never becomes completely worthless . 2. Generally results in less dilution to existing stockholders 3. Better aligns employee incentives with company incentives .

Two main reasons corporations issue convertibles

1. To raise equity capital without giving up more ownership control than necessary . 2. Obtain debt financing at cheaper rates

Measure the dilutive effects of potential conversion on EPS using the if - converted method . This method for a convertible bond assumes :

1. the conversion at the beginning of the period ( or at the time of issuance of the security , if issued during the period ) , and 2. the elimination of related interest , net of tax .

Craig purchased a unit comprising one share of stock and one detachable warrant on April 7 , 2019. The warrant was exercisable at $ 21.20 per share , good for five years , and trading at $ 2 per warrant . On May 17 , 2020 , Craig exercised his warrant . At that time , the stock was selling for $ 21.95 per share . How much cash did Craig pay per share of stock on 5/17/2020 ?

21.20 Solution On 5/17/2020 , Craig is entitled to a right to purchase common stock at the price agreed upon on 04/07/2020 . The agreed exercisable amount per share is 21.20 . He has a guaranteed profit every time the stock goes up .

Measure the dilutive effects of potential conversion using the treasury stock method .This method assumes :

: 1. the exercise the options or warrants at the beginning of the year ( or date of issue if later ) , and 2. that the company uses those proceeds to purchase common stock for the treasury .

Book value approach .

A method used for determining the issue price of stock when bonds are converted into stock which records the stock issued using the book value of the bonds at the issue date

Convertible bonds .

A security that combines the benefits of a bond with the privilege of exchanging it for stock at the holder's option

Stock option .

A warrant which gives selected employees the option to purchase common stock at a given price over an extended period of time .

On January 4 , 2020 , Newell Water Company issued 10 - year convertible bonds at 105. On October 17 , 2020 , Newell encouraged bondholders to convert their bonds into common stock , with each investor receiving common stock with an aggregate par value equal to the total face amount of the bonds . Newell's common stock was selling at 50 % above par value at the time of the conversion . How the cash proceeds from the issuance of the convertible bonds on January 4 , 2020 , be reported ?

As a liability for the entire proceeds Solution IFRS requires that the issuer of convertible debt record the liability and equity components separately . At the time of issuance , the method for recording convertible bonds at the issuance date follows the method used to record straight debt issues Convertible bonds are classified as a liability .

On November 1 , 2019 , the stockholders of Chen Company approve a plan that grants the company's five executives options to purchase 2,000 shares each of the company's $ 1 par value common stock . The company grants the options on January 1 , 2020. The executives may exercise the options at any time within the next 10 years . The option price per share is $ 60 , and the market price of the stock at the date of grant is $ 70 per share . Under the fair value method , the company computes total compensation expense by applying an acceptable fair value option -pricing model ( e.g. Black - Scholes ) . To keep this illustration simple , we assume that the fair value option - pricing model determines Chen's total compensation expense to be $ 220,000 .

Assume that the expected period of benefit is two years starting with the grant date . Chen would record the transactions related to this option contract as follows . Dec. 31 , 2020 Compensation Expense 110,000 Paidin Capital - Stock Options 110,000 Dec. 31 , 2021 Compensation Expense 110,000 Paid - in Capital - Stock Options 110,000 * ( $ 220,000 ÷ 2 )

When will the distribution of stock rights to existing common stockholders increase paid - in capital ?

At the date of exercise of the rights an increase paid-in capital , the stockholder would need to exercise excess of par value , which credits Paid - in Capital in Excess of Par .

Hilton , Inc. has a $ 1,000 bond that is convertible into 10 shares of common stock ( par value $ 10 ) . At the time of conversion , the unamortized premium is $ 50 . Hilton records the conversion of the bonds as follows .

Bonds Payable 1,000 Premium on Bonds Payable. 50 Common Stock. 100 Paid - in Capital in Excess of Par 950 Common

Justice Enterprises issued $ 1,000 par value convertible bonds at 98. At the time of issuance , they should record credits to

Bonds Payable only .

Thomas and Laura are both journalizing the conversion of convertible securities . Thomas is working with convertible bonds , and Laura is working with shares of convertible preferred stock . How will their journalizing processes be similar ?

Both will record an increase in the number of common stock shares . Solution They will both record a journal to account for the additional common stock due to the conversion . Convertible preferred stock includes an option for the holder to convert preferred shares into a fixed number of common shares and convertible bonds . Convertible bonds are corporate bonds that can be exchanged for common stock in the issuing company . Companies issue convertible bonds to lower the coupon rate on debt and to delay dilution .

On April 1 , 2014 , Clayton Company issued 500 $ 1,000 bonds at 104. Each bond was issued with one detachable stock warrant . Shortly after issuance , the bonds were selling at 97 , but the fair value of the warrants cannot be determined . ( b ) Assume the same facts as part ( a ) , except that the warrants had a fair value of $ 65 . Prepare the entry to record the issuance of the bonds and warrants .

Cash 520,000 Discount on Bonds Payable 12,657 Bonds Payable. 500,000 Paid - in Capital - Stock Warrants 32,657

Convertible preferred stock

Classified as part of stockholders ' equity , unless mandatory redemption exists . No theoretical justification for recognizing a gain or loss when exercised . Company uses the book value method .

Assume that DeGeorge leaves on February 3 , 2022 ( before any expense has been recorded during 2022 ) . The entry to record this forfeiture is as follows

Common Stock ( 1,000 × $ 1 ) 1,000 PaidnCapital in Excess of Par - Common 19,000 Compensation Expense ( $ 4,000 × 2 ) 8,000 Unearned Compensation 12,000

Stock Dividends and Stock Splits

Companies restate the issuance of a stock dividend or stock split , but not the issuance or repurchase of stock for cash

At December 31 , 2020 , Ogden records compensation expense of $ 4,000 ( 1,000 shares × $ 20 x .20 ) as follows

Compensation Expense 4,000 Unearned Compensation 4,000 Ogden records compensation expense of $ 4,000 for each of the next four years 2021 2022 , 2023 , and 2024 ) .

: Prior to 2020 , Barkley Company issued 40,000 shares of 6 % convertible , cumulative preferred stock , $ 100 par value . Each share is convertible into 5 shares of common stock . Net income for 2020 was $ 1,200,000 . There were 600,000 common shares outstanding during 2020. There were no changes during 2020 in the number of common or preferred shares outstanding .

Compute diluted earnings per share for 2020 . When calculating Diluted EPS , begin with basic EPS . Net income = $ 1,200,000 - Pfd.Div . $ 240,000 /Weighted - average shares= 600,000 which = 1.6$ 40,000 shares x $ 100 par × 6 % = $ 240,000 dividend then you add 240000/200000 = 1.5 diluted eps (40000 x5)= the 200000^

On the date of issuance , what is the main difference between recording convertible bonds and convertible preferred stock ?

Convertible bonds are classified as a liability , while convertible preferred stock is classified as equity Solution Convertible bonds are long - term liabilities grouped in the " bonds payable " account . Preferred stock shares are a type of hybrid security , falling somewhere between debt and equity . Equity gives shareholders ownership , but they have little claim on assets if the company falters and liquidates .

Illustration : Host Enterprises issued 1,000 shares of common stock ( par value $ 2 ) upon conversion of 1,000 shares of preferred stock ( par value $ 1 ) that was originally issued for a $ 200 premium . The entry would be :

ConvertiblePreferredStock( 1,000 × $ 1 )1,000 Paid in CapitalExcess of ParPreferred 200 Retained Earnings 800 Common Stock ( 1,000 × $ 2 ) 2,000

On April 1 , 2014 , Clayton Company issued 500 $ 1,000 bonds at 104. Each bond was issued with one detachable stock warrant Shortly after issuance , the bonds were selling at 97 , but the fair value of the warrants cannot be determined . Instructions ( a ) Prepare the entry to record the issuance of the bonds and warrants

Debit April 1 Cash. 520,000 Discount on Bonds Payable. 15,000 Bonds Payable 500,000 Paid in Capital - Stock Warrants 35,000

Helloid , Inc. has outstanding $ 1,000,000 par value convertible debentures convertible into 100,000 shares of $ 1 par value common stock . Helloid wishes to reduce its annual interest cost . To do so , Helloid agrees to pay the holders of its convertible debentures an additional $ 80,000 if they will convert . Assuming conversion occurs , Helloid makes the following entry .

Debt Conversion Expense 80,000 Bonds Payable. 1,000,000 Common Stock 100,000 × $ 1 ) 100,000 Paid - in Capital in Exc of ParCommon 900,000 Cash 80,000

Stock Warrants Proportional Method

Determine 1. value of the bonds without the warrants , and 2. value of the warrants . The proportional method allocates the proceeds using the proportion of the two amounts , based on fair values

Zambrano Company's net income for 2020 is $ 40,000 . The only potentially dilutive securities outstanding were 1,000 options issued during 2019 , each exercisable for one share at $ 8 . None has been exercised , and 10,000 shares of common were outstanding during 2020. The average market price of the stock during 2020 was $ 20 .

Diluted EPS $ 40,000 + =$ 40,000 / =3.77 10,000 + 600 10,600 Basic EPS = $ 4.00

Diluted earnings per share .

Earnings per share based on the number of common shares outstanding plus all contingent issuances of common stock that could reduce earnings per share .

Stock rights .

Existing stockholders have the right ( preemptive privilege ) to purchase newly issued shares in proportion to their holdings .

Current authoritative pronouncements require that a portion of the proceeds received from the issuance of convertible debt be accounted for as being attributable to the conversion feature

False

L.O. The proceeds from the sale of debt with nondetachable stock warrants should be allocated between the two securities .

False

How should the difference between the cash acquisition price of retired convertible debt and the carrying amount of the debt be recorded by the issuer ?

It should be recorded as income .

If Chen's executives fail to exercise the remaining stock options before their expiration date , the company transfers the balance in the Paid - in Capital - Stock Options account a more properly titled paid - in capital account , such as Paid - in Capital - Expired Stock Options . Chen records this transaction at the date of expiration as follows .

January 1 , 2030 paid inCapital - Stock Options 176,000 Paid - in Capital Expired Stock Options 176,000 * ( $ 220,000 × 80 % )

If Chen's executives exercise 2,000 of the 10,000 options ( 20 percent of the options ) on June 1 , 2023 ( three years and five months after date of grant ) , the company records the following journal entry

June 1 , 2023 Cash ( 2,000 x $ 60 ) 120,000dr PnCapitalStockOptio( 20%*$ 220,000) 44,000dr Common Stock ( 2,000 x $ 1 ) 2,000 Paid -Capital in Excess of ParCommon 162,000

Stock option plans .

Long - term compensation plans which attempt to develop giving them an equity interest based on changes in long in executives a strong loyalty toward the company by term measures such as increases in earnings per share , revenues , stock price , or market share .

Illustration : Assume that the fair value of the AT & T warrants is $ 300,000 , but the company cannot determine the fair value of the bonds without the warrants . The following illustration shows the amount allocated to the warrants and the stock in this case .

Lump - sum receipt $ 10,000,000 Allocated to the warrants ( 300,000 ) Balance allocated to bonds $ 9,700,000

Mayfield Corporation has net income of $ 210,000 for the year and a weighted - average number of common shares outstanding during the period of 100,000 shares . The company has two convertible debenture bond issues outstanding One is a 6 percent issue sold at 100 ( total $ 1,000,000 ) in a prior year and convertible into 30,000 common shares . The other is a 10 percent issue sold at 100 ( total $ 1,000,000 ) on April 1 of the current year and convertible into 36,000 common shares . The tax rate is 20 percent .

Mayfield calculates the weighted - average number of shares outstanding , as follows . Weighted - average number of shares outstanding 100,000 Add : Shares assumed to be issued : 6 % debentures ( as of beginning of year ) 30,000 10 % debentures ( as of date of issue , April 1 ; 9/12 x 36,000 ) 27,000 Weighted - average number of shares adjusted for dilutive securities 157,000 Dilutive EPS IS 2.03 see phone

Earnings per share =

Net income - Preferred dividends/ Weighted Average Number of Shares Outstanding

How should nondetachable stock warrants outstanding be classified ?

Not as a separate financial statement item .

On January 1 , 2020 , Ogden Company issues 1,000 shares of restricted stock to its CEO , Christie DeGeorge . Ogden's stock has a fair value of $ 20 per share on January 1 , 2020. Additional information is as follows . 1. The service period related to the restricted stock is five years . 2. Vesting occurs if DeGeorge stays with the company for a five - year period . 3. The par value of the stock is $ 1 per share .

Ogden makes the following entry on the grant date ( January 1 , 2020 ) Unearned Compensation 20,000 Common Stock ( 1,000 x $ 1 ) 1,000 PaidnCapital in Excess of ParCommon 19,000 Unearned Compensation represents the cost of services yet to be performed which is not an asset . Unearned Compensation , a contra equity account , is reported as a compo of stockholders ' equity in the balance sheet

Common Stock is found by multiplying

Par Value x Number of shares

Convertible preferred stock .

Preferred stock which is convertible into common stock at the holder's option .

Knowledge

Recording convertible bonds follows the method used to record straight debt issues , with any discount or premium amortized over the term of the debt .

Dilutive securities .

Securities that are not common stock in form but enable their holders to obtain common stock upon exercise or conversion . Examples include convertible bonds . convertible preferred stocks , stock warrants , and contingent shares

Antidilutive securities .

Securities which upon conversion or exercise increase earnings per share ( or reduce the loss per share ) .

On September 1 , 2014 , Herbert Corporation sold at 106 ( plus accrued interest ) 4,000 of its 9 % , 10 year , $ 1,000 face value , nonconvertible bonds with detachable stock warrants . Each bond carried two detachable warrants . Each warrant was for one share of common stock at a specified option price of $ 18 per share . Shortly after issuance , the warrants were quoted on the market for $ 5 each . No fair value can be determined for the Herbert Corporation bonds . Interest is payable on December 1 and June 1. The bond issue costs of $ 35,000 were incurred .

Sept. 1 Cash 4,295,000 Unamortized Bond Issue Costs 35,000 Bonds Payable 4,000,000 Premium on Bonds Payable 200,000 Paid - in Capital - Stock Warrants 40,000 Interest Expense 90,000

* Stock appreciation rights ( SARS

Similar to a stock option plan except executives do not have to purchase the stock but instead are given a right to receive the excess of the market price of the stock at the date of exercise over a pre - established price .

Restricted stock plans

Stock plans that transfer shares of stock to employees , subject to an agreement that the shares cannot be sold , transferred or pledged until vesting occurs .

What is the term used to describe long - term options to buy common stock at a fixed price that are sold with other securities ?

Stockwarrants The correct answer is stock warrants . Stock warrants ' main attraction is that the common stock price is set for the life of that warrant . Convertible bonds give the stockholder the option to convert into common shares . However , there is no such thing as incremental bonds and proportional warrants . The two methods of allocation of securities are the proportional method and the incremental method .

Weighted average number of shares outstanding

The basis for the per share amounts reported which during the period by calculating the number reflects shares issued or purchased of shares outstanding by the fraction of the period they are outstanding .

Assume that AT & T's bonds ( par $ 1,000 ) sold for 99 without the warrants soon after their issue . The market price of the warrants at that time was $ 30 . ( Prior to sale the warrants will not have a fair value . ) The allocation relies on an estimate of fair value , generally as established by an investment banker , or on the relative fair value of the bonds and the warrants soon after the company issues and trades them . The price paid for 10,000 , $ 1,000 bonds with the warrants attached was par , or $ 10,000,000 . The following illustration shows the proportional allocation of the bond proceeds between the bonds and warrants .

The bonds sell at a discount . AT & T records the sale as follows . Cash 9,705,882 Discount on Bonds Payable 294,118 Bonds Payable 10,000,000 In addition , AT & T sells warrants that it credits to paid - in capital . It makes the following entry Cash 294,118 Paid - in Capital - Stock Warrants 294,118

Measurement date .

The first date on which are known both ( 1 ) the number of shares that an individual employee is entitled to receive and ( 2 ) the option or purchase price .

Earnings per share .

The income earned by each share of common stock .

Grant date

The income earned by each share of common stock .

Which of the following is a defining characteristic for securities classified as equity ?

The issuer has no obligation to pay dividends or repurchase the securities

Treasury stock method .

The method and warrants options and warrants are used to purchase common proceeds from the exercise of of the year ( or date of which assumes ( 1 ) the options or warrants used to measure the dilutive effect of options issue if later ) , and ( 2 ) the are exercised at the beginning stock for the treasury

If - converted method

The method used to measure the dilutive effect of convertible securities which assumes ( 1 ) the conversion of the convertible securities at the beginning of the period or at the time of issuance of the security , if issued during the period ) , and ( 2 ) the elimination of interest , net of tax or preferred dividend .

Service period .

The period in which the employee performs the service for which he or she is being compensated .

Which of the following is one reason corporations issue convertible debt ?

They can obtain debt financing at lower rates . Solution Corporations issue convertible securities for two main reasons . One is to raise equity capital without giving up more ownership control than necessary . A second reason to issue convertibles is to obtain debt financing at cheaper rates .

If the cash proceeds from a bond issue with detachable stock warrants exceeds the sum of the par value of the bonds and the fair market value of the warrants , how should the excess proceeds be recorded ?

They should be credited to premium on bonds payable Solution When the bond is issued , the company must debit the cash by the amount that the business receives , credit a bond payable liability account by an amount equal to the face value of the bonds , and credit a bond premium account by the difference between the sale price and the bond's face value .

Winter Sports Apparel issued convertible debt securities . Which of the following statements is true regarding their journal entries as a result of this issuance ?

They will have a single journal entry at issuance for all securities , separate entries each time bonds are converted to common stock , and a single entry at the end of the bond term to retire all non - converted bonds

L.O. 2 Nondetachable warrants do not require an allocation of the proceeds between the bonds and the warrants .

True

L.O. 3 ) The FASB requires recognition of compensation cost for stock options using the fair value method .

True

Using the fair value method , total compensation expense is computed granted to based on the fair value of the options expected to vest on the date the options are granted to employeds

True

par value of the common stock issued exceeds the book value of the preferred When convertible preferred stock is converted into common stock and the stock then retained earnings is usually debited for the difference .

True

Alice Company issues 6,000 shares of restricted stock to its CFO , Andrea Gates , on January 1 , 2014. The stock has a fair value of $ 80,000 on this date . The service period related to this restricted stock is 5 years . Vesting occurs if Gates stays with the company until December 31 , 2018. The par value of the stock is $ 10 . At December 31 , 2014 , the fair value of the stock is $ 65,000 . ( a ) Prepare the journal entries to record the restricted stock on January 1 , 2014 ( the date of grant ) , and December 31 , 2015 .

Unearned Compensation 80,000 Common Stock 60,000 Paid - in Capital in Excess of Par - Common Stock 20,000

What is the major difference between convertible debt and detachable stock warrants ?

Upon exercise of the warrants , the holder has to pay a certain amount of cash to obtain the shares . Explanation-Convertible bonds and detachable stock warrants both give the stockholder the option to convert into common shares . However , stock warrants guarantee the common stock price for the life of that warrant

What is the primary difference between detachable stock warrants and conversion privileges on convertible bonds ?

Warrants require the holder to pay a certain amount of money to obtain the shares . Convertible bonds and detachable However , stock warrants ' main attraction is that the common stock price is set for the life of that warrant and convertible bonds stock warrants both give the stockholder the option to convert into common shares . are not B

Detachable stock warrants .

Warrants that can be sold separately from their bonds

Nondetachable stock warrants .

Warrants that cannot be sold separately from their bonds .

Simple capital structure

When a corporation's capital structure consists only of common stock or includes no potentially dilutive convertible securities , options , warrants , or other rights that upon conversion or exercise could in the aggregate dilute earnings per common share .

Complex capital structure .

When a corporation's capital structure includes securities that could have a dilutive effect on earnings per common share .

Induced conversion .

When an issuer wishes to induce prompt conversion of its convertible debt to equity securities , the issuer may offer some form of additional consideration ( such as cash or common stock ) .

Stock Dividends and Stock Splits

When stock dividends or stock splits occur , companies need to restate the shares outstanding before the stock dividend or split , in order to compute the weighted - average number of shares

Stock Warrants Incremental Method

Where a company cannot determine the fair value of either the warrants or the bonds . Use the security for which fair value can be determined Allocate the remainder of the purchase price to the security for which it does not know fair value .

Detachable warrants involves two securities ,

a debt security , • a warrant to purchase common stock .

Dilutive securities

are defined as securities that are not common stock in form but that enable their holders to obtain common stock upon exercise or conversion . The most notable examples include convertible bonds , convertible preferred stocks , warrants , and contingent shares

Companies use the _____ when converting bonds

book value method

Complex Capital Structure exists when a business has

convertible securities , options and warrants , or other rights

A convertible bond has characteristics similar to

debt and equity . Solution IFRS separates the proceeds of a convertible bond between debt and equity by determining the fair value of the debt component before the equity component . A convertible bond is a fixed - income corporate debt security that yields interest payments , but can be converted into a number of equity shares

At the time of conversion from convertible preferred stock to common stock , if the par value of the common shares exceeds the carrying amount of the preferred shares , the issuer must

directly reduce retained earnings for the amount of the difference

If the issuer has no obligation to pay dividends or repurchase the security , it is usually classified as a an

equity .

Earnings per share

indicates the income earned by each share of common stock .

Warrants issued with other securities are best described as

long - term options to buy common stock at a fixed price

When using the book value method to report conversion of bonds or preferred stock to common stock , all the journal entries are based on the of the security being converted .

par value

In 2019 , Chirac Enterprises issued , at par , 60 , $ 1,000 , 8 % bonds , each convertible into 100 shares of common stock . Chirac had revenues of $ 17,500 and expenses other than interest and taxes of $ 8,400 for 2020. ( Assume that the tax rate is 40 % . ) Throughout 2020 , 2,000 shares of common stock were outstanding ; none of the bonds was converted or redeemed .

see phone

Barlow Upholstery recorded a debit of $ 280,000 to Debt Conversion Expense . The reason for this transaction is likely that they used a ( n )

sweetener to induce conversion of bonds to common stock . Solution Companies use an incentive to encourage bondholders to convert the bonds into common stock . It is called a sweetener . Sometimes the issuer wishes to encourage prompt conversion of its convertible debt to equity securities in order to reduce interest costs or to improve its debt to equity ratio .

convertible bonds

the conversion feature allows the corporation an opportunity to obtain equity capital without giving up more ownership control than necessary . Also , the conversion feature entices the investor to accept a lower interest rate than he or she would normally accept on a straight debt issue . Accounting for convertible bonds on the date of issuance follows the procedures used to account for straight debt issues .

L.O. One of the primary reasons for issuing convertible debt is the desire to raise equity capital that , assuming conversion , will arise when the original debt is converted

true

EPS Presentation and Disclosure A company should show per share amounts for :

• Income from discontinued operations , and continuing operations , Income from discontinued operations , and .Net income . Per share amounts for a discontinued operations should be presented on the fact of the income statement or in the notes .

Nondetachable warrants

• do not require an allocation of proceeds between the bonds and the warrants , companies record the entire proceeds as debt


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