On January 1, the company issued $2.5 million of six-year, zero-interest-bearing notes along with warrants to buy 1.25 million common shares for $10 per share. The company received $1.9 million for the notes and warrants. If offered alone, the notes would have been issued to yield 9% to the creditor. The warrants are valued at $550,000 with an option pricing model. Prepare the journal entries and discusses the recognition, measurement, and presentation of the financial instruments issued.

On January 1, the company issued $2.5 million of six-year, zero-interest-bearing notes along with warrants to buy 1.25 million common shares for $10 per share. The company received $1.9 million for the notes and warrants. If offered alone, the notes would have been issued to yield 9% to the creditor. The warrants are valued at $550,000 with an option pricing model. Prepare the journal entries and discusses the recognition, measurement, and presentation of the financial instruments issued.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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