The portion of proceeds from the sale of bonds with detachable stock warrants attributable to the warrants is accounted for as a(n)
A)additional paid-in capital account
B)common stock account
C)contra-liability account
D)adjunct-liability account

Question

Quizplus · Accepted Answer

The portion of proceeds from the sale of bonds with detachable stock warrants that is attributable to the warrants is accounted for as additional paid-in capital. This is because the amount received for the warrants is in excess of the fair value of the bonds alone, and therefore represents a contribution by the purchaser of the warrants to the issuing company's equity.

The Portion of Proceeds from the Sale of Bonds with Detachable