The following are unrelated transactions.
Present the required entries to record each of the transactions.
a)On March 1, 2017, Crane Corporation issued $350,000 of 5% non-convertible bonds at 106, which are due on February 28, 2037. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase one of Craneâs no par value common shares for $50. The bonds without the warrants would normally sell at 95. On March 1, 2017, the fair value of Craneâs common shares was $40 per share and the fair value of each warrant was $2. Crane prepares its financial statements in accordance with IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
b) Pronghorn Corp. issued $10,000,000 of par value, 6%, convertible bonds at 96. If the bonds had not been convertible, the companyâs investment banker estimates they would have been sold at 93. Pronghorn Corp. has adopted ASPE, and would like to explore all options available to report the convertible bond. Use residual method and value equity component at zero. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
c) Larkspur Limited issued $26,000,000 of par value, 4% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $6. Larkspur Limited has adopted ASPE. Use reisudal method and value equity component at zero. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
d) On July 1, 2017, Tien Limited called its 6% convertible bonds for conversion. The $13,000,000 of par value bonds were converted into 1,300,000 common shares. On July 1, there was $75,000 of unamortized discount applicable to the bonds, and the company paid an additional $85,000 to the bondholders to induce conversion of all the bonds. At the time of conversion, the balance in the account Contributed SurplusâConversion Rights was $250,000, and the bondâs fair value (ignoring the conversion feature) was $12,955,000. The company records conversion using the book value method. Use ASPE andIFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
e) On December 1, 2017, Horton Company issued 400 of its $1,000, 7% bonds at 104. Attached to each bond was one detachable stock warrant entitling the holder to purchase 10 of Hortonâs common shares. On December 1, 2017, the fair value of the bonds, without the stock warrants, was 95, and the fair value of each stock warrant was $50. Horton Company prepares its financial statements in accordance with IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
The following are unrelated transactions.
Present the required entries to record each of the transactions.
a)On March 1, 2017, Crane Corporation issued $350,000 of 5% non-convertible bonds at 106, which are due on February 28, 2037. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase one of Craneâs no par value common shares for $50. The bonds without the warrants would normally sell at 95. On March 1, 2017, the fair value of Craneâs common shares was $40 per share and the fair value of each warrant was $2. Crane prepares its financial statements in accordance with IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
b) Pronghorn Corp. issued $10,000,000 of par value, 6%, convertible bonds at 96. If the bonds had not been convertible, the companyâs investment banker estimates they would have been sold at 93. Pronghorn Corp. has adopted ASPE, and would like to explore all options available to report the convertible bond. Use residual method and value equity component at zero. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
c) Larkspur Limited issued $26,000,000 of par value, 4% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $6. Larkspur Limited has adopted ASPE. Use reisudal method and value equity component at zero. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
d) On July 1, 2017, Tien Limited called its 6% convertible bonds for conversion. The $13,000,000 of par value bonds were converted into 1,300,000 common shares. On July 1, there was $75,000 of unamortized discount applicable to the bonds, and the company paid an additional $85,000 to the bondholders to induce conversion of all the bonds. At the time of conversion, the balance in the account Contributed SurplusâConversion Rights was $250,000, and the bondâs fair value (ignoring the conversion feature) was $12,955,000. The company records conversion using the book value method. Use ASPE andIFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
e) On December 1, 2017, Horton Company issued 400 of its $1,000, 7% bonds at 104. Attached to each bond was one detachable stock warrant entitling the holder to purchase 10 of Hortonâs common shares. On December 1, 2017, the fair value of the bonds, without the stock warrants, was 95, and the fair value of each stock warrant was $50. Horton Company prepares its financial statements in accordance with IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
