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quester [9]
2 years ago
11

On January 2, 2021, Farr Co. issued 10-year convertible bonds at 105. During 2021, these bonds were converted into common stock

having an aggregate par value equal to the total face amount of the bonds. At conversion, the market price of Farr's common stock was 50 percent above its par value. On January 2, 2021, cash proceeds from the issuance of the convertible bonds should be reported as:_______.
a. paid-in capital for the entire proceeds.
b. paid-in capital for the portion of the proceeds attributable to the conversion feature and as a liability for the balance.
c. a liability for the face amount of the bonds and paid-in capital for the premium over the face amount.
d. a liability for the entire proceeds.
Business
1 answer:
zmey [24]2 years ago
5 0

Answer:

d. a liability for the entire proceeds.

Explanation:

In the case when the bonds would be converted into common stock and the market price of the common stock is 50% over its par value so the cash proceeds that arise from the issuance of the convertible bonds would be reported as the liability as the same would be credited to the liability account

Therefore the right option is d.

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Answer:

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The value from operations can be calculated by discounting back the free cash flow of the firm. The first three year's FCF will be discounted back using the WACC and when the growth rate o FCF becomes constant after Year 3, the terminal value will be calculated and discounted back too.

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question content area if $354,000 of 10% bonds are issued at 95, the amount of cash received from the sale is
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The amount of cash received from the sale is calculated to be $336,300.

The amount of cash received from the sale of bonds can be calculated by using the following formula;

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Answer: did you try logging in if so try to contact brainly by email

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