Neil Corporation issued 5,000 $1,000 bonds at 103. Each bond contains 15 detachable stock warrants that allow the bondholder to purchase a share of Neil's common stock for $50. Immediately after the issue, the bonds without the warrants were selling for $1,007. The stock warrants had no readily determinable value. How much will be credited to Additional Paid-in Capital-Stock Warrants?

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Quizplus · Accepted Answer

The bonds were issued at 103, meaning they were sold for $1,030 each. The bonds without warrants were selling for $1,007, so the difference of $23 per bond is attributed to the warrants. With 5,000 bonds, the total value attributed to the warrants is 5,000 x $23 = $115,000, which is credited to Additional Paid-in Capital-Stock Warrants.

Neil Corporation Issued 5,000 $1,000 Bonds at 103