SO$4-$ Warrants

On $1/1/20,$ Zukor Films issued $$45$ million in bonds at $7\mathrm{.}0\%$ interest. Interest is payable semi$-$annually on June $30$ and December $31,$ and the bonds mature on $12/31/29.$ Each $$1,000$ bond comes with one warrant allowing the holder to purchase $10$ shares of Zukor$$s no par common stock at $$80$ per share. At issuance, the fair value of the warrants was $$45\mathrm{.}61$ per warrant, and Zukor issued the bonds for $112.$

What journal entry does Zukor record for the issuance of the bonds?

What can you say about the market rate of interest on $1/1/20?$

On $12/31/24,50\%$ of the warrants are exercised. What journal entry does Zukor record for this transaction?

Assuming all the same facts, except Zukor issued the bonds for $95$ instead of $112,$ what can you say about the market rate of interest on $1/1/20?$

AO$6-$ Early Extinguishment

On $1/1/19,$ Lasky Pictures issued $$75$ million in bonds with a stated interest rate of $8\%.$ The bond indenture includes a provision wherein Lasky can call the bonds anytime before maturity at $103.$ Interest is payable semi$-$annually on June $30$ and December $31,$ and the bonds mature on $12/31/28.$ When Lasky issued the bonds, the market rate of interest was $9\%.$ On June $30,2025,$ Lasky retired these bonds at the call price.

What journal entry does Lasky record on $1/1/19?$

Through $6/30/25,$ how much interest expense has Lasky incurred over the life of the bond?

What is the impact on Lasky$$s income statement when Lasky retires the bonds?

Identify no more than $3$ possible scenarios that would lead Lasky to decide that it made business sense to retire the bonds? Describe how, if you were Lasky$$s CFO, you would present your business case to the CEO.