A corporation issues bonds with detachable warrants. The amount to be recorded as paid-in capital is preferably

Question

Quizplus · Accepted Answer

The amount to be recorded as paid-in capital for bonds with detachable warrants should be based on the relative market values of the two securities involved. This means that the value of the bonds and the warrants should be separately determined, and the allocation of the total proceeds should be based on their respective values in the market. This approach provides a more accurate reflection of the true value of the securities and ensures that the paid-in capital is recorded in accordance with the actual economic substance of the transaction.

A Corporation Issues Bonds with Detachable Warrants