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cpaboston
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Joined: 08 Jul 2008
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Posted: 13 Jul 2008 at 16:58 \| IP Logged

I believe the APIC - Warrants comes from

1000 bonds x 50 detachable warrants each x FMV of $4

= 200,000

5carrots
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Joined: 19 Aug 2007
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Posts: 17

Posted: 16 Aug 2008 at 12:01 \| IP Logged

Can someone provide me with a brief explanation of the differences between Bonds Payable vs. Bond Liability and any items that may affect their balances?

I understand Bonds Payable to be the value of the bonds at issuance and Bond Liability to be the amount owed on the bonds by the issuing company. So, would amortization of discounts and premiums affect bond liability? What about the periodic payments of interest?

Thanks for the help.

wannabe
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Joined: 21 Jun 2008
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Posts: 522

Posted: 08 Sep 2008 at 01:21 \| IP Logged

I'm having trouble with this MCQ

R Corp. issue bonds with a face amount of $200,000. Each $1000 bond contained detachable stock warrants fro 100 shares of R common stock. Total proceeds from the issue amounted to $240,00. The market value of each warrant was $2, and the market value of the bonds without the warrants was $196,000. The bonds were issud at a discount of A) 0 , B)$40,678 C)$678, D) $4000

The correct answer is C...I'm having trouble understanding why. I'm doing journal entries and they don't balance. Explanation provided

196000/196000+40000 * 240000=199322

200000-199322 = 678

Is there a different way to answer this question? or maybe there is something here that I'm missing...thanks!

wannabe
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Posted: 08 Sep 2008 at 01:51 \| IP Logged

still working on this...i'll balance if I do this:

cash $240,000

Discount 678

Bond Payable $200,000

Warrants $40,678

Problem is the market value of warrants is $40,000...hmmm...any thoughts?

cmjuneja
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Joined: 06 Jun 2007
Location: India
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Posts: 1

Posted: 18 Jan 2009 at 04:42 \| IP Logged

could not understand the stuff with amortizations etc

plez help

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