Wagagoostui Corporation has 300,000 common shares outstanding on Janu- ary 1, 2017, when it issues convertible...

Wagagoostui Corporation has 300,000 common shares outstanding on Janu- ary 1, 2017, when it issues convertible bonds. The debt issue is composed of 1,000 bonds at $1,000 face value with a 20-year term and a 10% coupon rate. Each bond is sold at 101 and is convertible into 20 common shares. Wagagoostui incurs costs of $80,000 related to the issue. An underwriter advises Wagagoostui that the bonds would likely have sold for 99 without the conversion feature. The straight-line method is used to amortize any premium or discount, as well as bond issue costs. Wagagoostui prepares financial statements in accordance with ASPE.

Instructions

a) Record issuance of the convertible bonds on January 1, 2017, using the book value method. Reflect on why ASPE would elect to use the residual method even though they can elect the book value method.

Expert Solution

ekkarill92 answered 1 year ago

Cullumber Corporation had two issues of securities outstanding: common shares and a 7% convertible bond issue...

Cullumber Corporation had two issues of securities outstanding: common shares and a 7% convertible bond issue in the face amount of $8 million. Interest payment dates of the bond issue are June 30 and December 31. The conversion clause in the bond indenture entitles the bondholders to receive 40 no par value common shares in exchange for each $1,000 bond. The value of the equity portion of the bond issue is $48,000. On June 30, 2020, the holders of $2.40...

On January 1, 2016, Alpha Corporation had 300,000 shares of common stock outstanding with a par...

On January 1, 2016, Alpha Corporation had 300,000 shares of common stock outstanding with a par value of $3 per share. On March 31, Alpha Corporation declared a 10% stock dividend when the market value was $8 per share. Use this information to prepare the General Journal entry (without explanation) for March 31. If no entry is required then write "No Entry Required."

1) Empire Today Inc. has 10 million shares of common stock outstanding, 300,000 shares of 5%...

1) Empire Today Inc. has 10 million shares of common stock outstanding, 300,000 shares of 5% preferred stock outstanding, and 7 million of 6.7 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $85 per share and has a beta of 1.15, the preferred stock currently sells for $103 per share, and the bonds have 20 years to maturity and sell for 93% of par. The market risk premium is 11 percent, T-bills are yielding...

On January 1 , 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of...

On January 1 , 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of Delta Crating Corp. for $250 million and accounts for this investment under the equity method. The following information is available regarding Delta Crating Corp. ($ in millions) Net identifiable assets at 1/1/2017 acquisition: Fair Value 700 Book Value 500 2017 Net Income 100 2017 Dividends declared and paid 30 2018 net income 80 2018 dividends declared and paid 20 12/31/2017 fair value (based on...

Titan Mining Corporation has 8.6million shares of common stock outstanding and 300,000 5.4 percent semiannual bonds...

Titan Mining Corporation has 8.6million shares of common stock outstanding and 300,000 5.4 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.3; the bonds have 15 years to maturity and sell for 115 percent of par. The market risk premium is 7.4 percent, T-bills are yielding 3 percent, and the company's tax rate is 21 percent. a. What is the firm's market value capital structure? b....

Titan Mining Corporation has 8.6 million shares of common stock outstanding and 300,000 5 percent semiannual...

Titan Mining Corporation has 8.6 million shares of common stock outstanding and 300,000 5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.3, and the bonds have 15 years to maturity and sell for 115 percent of par. The market risk premium is 7.4 percent, T-bills are yielding 3 percent, and the company’s tax rate is 40 percent. a. What is the firm's market value...

Court Casuals has 300,000 shares of common stock outstanding as of the beginning of the year...

Court Casuals has 300,000 shares of common stock outstanding as of the beginning of the year and has the following transactions affecting stockholders' equity during the year. May 18 Issues 22,000 additional shares of $1 par value common stock for $43 per share. May 31 Purchases 5,000 shares of treasury stock for $44 per share. July 1 Declares a cash dividend of $2 per share to all stockholders of record on July 15. Hint: Dividends are not paid on treasury...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 16,800 shares of common stock outstanding...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 16,800 shares of common stock outstanding at the beginning of 2019. Francis issued 2,100 additional shares on May 1 and 1,400 additional shares on September 30. It also has two convertible securities outstanding at the end of 2019. These are: Convertible preferred stock: 1,750 shares of 8.0%, $50 par, preferred stock were issued on January 2, 2016, for $55 per share. Each share of preferred stock is convertible into 2...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding at the beginning of 2016. Francis issued 3,900 additional shares on May 1 and 2,600 additional shares on September 30. It also has two convertible securities outstanding at the end of 2016. These are: Convertible preferred stock: 3,250 shares of 9.0%, $50 par, preferred stock were issued on January 2, 2013, for $60 per share. Each share of preferred stock is convertible into 3...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding at the beginning of 2016. Francis issued 3,900 additional shares on May 1 and 2,600 additional shares on September 30. It also has two convertible securities outstanding at the end of 2016. These are: Convertible preferred stock: 3,250 shares of 9.0%, $50 par, preferred stock were issued on January 2, 2013, for $60 per share. Each share of preferred stock is convertible into 3...

Question

Wagagoostui Corporation has 300,000 common shares outstanding on Janu- ary 1, 2017, when it issues convertible...

Solutions

Expert Solution

Related Solutions

Cullumber Corporation had two issues of securities outstanding: common shares and a 7% convertible bond issue...

On January 1, 2016, Alpha Corporation had 300,000 shares of common stock outstanding with a par...

1) Empire Today Inc. has 10 million shares of common stock outstanding, 300,000 shares of 5%...

On January 1 , 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of...

Titan Mining Corporation has 8.6million shares of common stock outstanding and 300,000 5.4 percent semiannual bonds...

Titan Mining Corporation has 8.6 million shares of common stock outstanding and 300,000 5 percent semiannual...

Court Casuals has 300,000 shares of common stock outstanding as of the beginning of the year...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 16,800 shares of common stock outstanding...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding...