Sun Ltd. has decided to raise additional capital by issuing HK$175,000 face value of bonds with a

Question:

Sun Ltd. has decided to raise additional capital by issuing HK$175,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, share warrants should be issued at the rate of one warrant for each HK$100 bond sold. The fair value of the bonds without the warrants is HK$136,000. The proceeds upon issuance of the bonds and warrants was HK$150,000.


Instructions

a. What entry should be made at the time of the issuance of the bonds and warrants?

b. If the warrants were non-detachable, would the entries be different? Discuss.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Intermediate Accounting IFRS

ISBN: 9781119607519

4th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

Question Posted: