On September 1, year 1, the Junction Company sold at 104 (plus accrued interest) 4,000 of its 9%, ten-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants; each warrant was for one share of common stock, at a specified option price of $15 per share. Shortly after issuance, the warrants were quoted on the market for $3 each. No market value can be determined for the bonds above. Interest is payable on December 1 and June 1. Junction Company has a December 31 fiscal year-end. Junction Company does not elect the fair value option for valuing its financial liabilities.
What is the bond premium?
Finally done!!! Experience-pending. Ethics- Pending.
Reg 78 / 73/82.
Aud 74/89.
BEC 72 /78.
FAR 74/ 73/ 82.