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Wert
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Joined: 17 Apr 2010
Location: United States
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| Posted: 08 Jul 2010 at 03:30 | IP Logged
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Blue Co. issued preferred stock with detachable common stock warrants at a price that exceeded both the par value and the market value of the preferred stock. At the time the warrants are exercised, Blue's total stockholders' equity is increased by the...
Cash received upon exercise of the warrants - yes
Carrying amount of the warrants - no
Wiley gives the following explanation:
When PS with detachable warrants is issued, we make the following entry
Cash (debit)
PS
APIC PS
APIC War
when stock warrants are exercised
Cash (debit)
APIC War (debit)
CS
APIC CS
I wonder how stockholders' equity is increased by cash received? The way I see it, it's increased by the cash received minus APIC War....
I am totally confused. Please help me. Thank you
Thank you for the answered one about 75 sufficiency test
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Tajik4CPA
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| Posted: 08 Jul 2010 at 09:34 | IP Logged
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Cash received is usually the difference between market price and exercise price of warrants. Stockholder's equity is increased because you issue new CS.
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FAR - 92
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REG - 83
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Becker 2009 and Gleim 2010, Wiley 13.0
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Wert
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| Posted: 08 Jul 2010 at 16:33 | IP Logged
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Thank you very much
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Topic: Preferred stock with detachable warrants
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