Homework Answers
Answer
1)
Carring value of bond = Face value of bond + unamortized premium – unamortized discount
Carring value of bond = (900 x $1000) + (900 x $50) - 0
Carring value of bond = $9,45,000
Bond issued at 105, i.e at 105%
So, Premium = $1000 x 5% = $50
2)
The Proceeds from the issue of the Bonds = 900 x $1000 x 105% = $9,45,000
Calculation of Percentage of Assign:
Proportional Method has been used for calculating the percentage to assign
| No. of units | Warrants per Bond | Total Units | Market Price Per Unit | Total | Percentage | |
| Bond | 900 | - | 900 | 900 | 810000 | 81% |
| Warrants | 900 | 20 | 18000 | 10 | 180000 | 19% |
| Total | 990000 | 100% |
Value Allocated to Bond = $945000 x 81% = $7,65,450
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