Question

During 2016, Dima Co. issued eight hundred, $1,000 bonds due in ten years at 104. One detachable stock warrant entitling the holder to purchase 15 shares of Dima’s common stock was attached to each bond. At the date of issuance, the market value of the bonds, without the stock warrants, was quoted at 96. The market value of each detachable warrant was quoted at $40. What amount, if any, of the proceeds from the issuance should be accounted for as part of Dima’s stockholders' equity (paid-in capital from stock warrants?

Selected Answer:

E.

$32,000.

Answers:

A.

$0.

B.

$33,280.

C.

None of these answers.

D.

$31,616.

E.

$32,000.

During 2016, Dima Co. issued eight hundred, $1,000 bonds due in ten years at 104. One detachable stock warrant entitling the holder to purchase 15 shares of Dima’s common stock was attached to each bond. At the date of issuance, the market value of the bonds, without the stock warrants, was quoted at 96. The market value of each detachable warrant was quoted at $40. What amount, if any, of the proceeds from the issuance should be accounted for as part of Dima’s stockholders' equity (paid-in capital from stock warrants?

Selected Answer:	E. $32,000.
Answers:	A. $0.
	B. $33,280.
	C. None of these answers.
	D. $31,616.
	E. $32,000.

Answer 1