B is corrent. ASC Subtopic 470-20 states that the proceeds of the bonds issued with detachable warrants are allocated between the bonds and the warrants based upon their relative FV at the time of issue. In this case, the portion allocated to the warrants is $10,000, calculated as follows: [$12,000 / ($108,000 + $12,000)] = 10% x $100,000 = $10,000. Therefore, the warrants are recorded at $10,000, and the bonds are recorded at $90,000.
A is incorrect. ASC Subtopic 470-20 states that the proceeds of the bonds issued with detachable warrants are allocated between the bonds and the warrants based upon their relative FV at the time of issue. In this case, the portion allocated to the warrants is $10,000, calculated as follows: [$12,000 / ($108,000 + $12,000)] = 10% x $100,000 = $10,000. Therefore, the warrants are recorded at $10,000, and the bonds are recorded at $90,000.
C is incorrect. ASC Subtopic 470-20 states that the proceeds of the bonds issued with detachable warrants are allocated between the bonds and the warrants based upon their relative FV at the time of issue. In this case, the portion allocated to the warrants is $10,000, calculated as follows: [$12,000 / ($108,000 + $12,000)] = 10% x $100,000 = $10,000. Therefore, the warrants are recorded at $10,000, and the bonds are recorded at $90,000.
D is incorrect. ASC Subtopic 470-20 states that the proceeds of the bonds issued with detachable warrants are allocated between the bonds and the warrants based upon their relative FV at the time of issue. In this case, the portion allocated to the warrants is $10,000, calculated as follows: [$12,000 / ($108,000 + $12,000)] = 10% x $100,000 = $10,000. Therefore, the warrants are recorded at $10,000, and the bonds are recorded at $90,000.
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