On May 31, Galaxy Acquisition Corporation (Galaxy) entered into a warrant agreement (Warrant Agreement) with Costal Corporation
Question:
On May 31, Galaxy Acquisition Corporation (“Galaxy”) entered into a warrant agreement (“Warrant Agreement”) with Costal Corporation (“Warrant Agent”). The Warrant Agreement designates Coastal Corporation as Warrant Agent of Galaxy and specifies the key terms of the warrants issued by Galaxy.
Pursuant to the Initial Public Offering on May 1, Galaxy sold 10,000,000 Public Units at a purchase price of $10.00 per Unit. Each Unit consisting of one ordinary share, par value $0.01 per share (“Ordinary Share”), one right to receive one-tenth (1/10) of one Ordinary Shares (“Right”), and one-half of a redeemable warrant (“Public Warrant”). Each whole redeemable Public Warrant entitling its holder to purchase one Ordinary Share.
Simultaneously with the Initial Public Offering, the Sponsor purchased an aggregate of 500,000 Private Units at $10.00 per Unit. Each Unit consisting of one Ordinary Share, par value $0.01 per share, one Right to receive one-tenth (1/10) of one Ordinary Shares, and one-half of a redeemable warrant (“Private Warrant”). Each whole redeemable Private Warrant entitling its holder to purchase one Ordinary Share.
The public warrants are recorded as permanent equity at issuance on May 1, in Galaxy’s financial statements on the issuance date and do not need any subsequent adjustment. 5,000,000 warrants at $0.95 and $0.06 per warrant on May 1 and December 31.
Journal entries that the company shall make an initial recognition of Public Warrants as equity at fair value on May 1, and no need to make subsequent adjustment for change in fair value of warrants.
