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What is the entry to record the exercise of the warrants

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Reference no: EM132563589

Share Warrants Libya Company wants to raise its working capital. After analysis of the available options. the company decides to issue 6,000 shares of $30 par preference shares with detachable warrants. The package of the shares and the warrants sells for $120. The warrants enable the holder to purchase 6,000 shares of $10 par ordinary shares at $40 per share. Immediately following the issuance of the shares, the share warrants are selling at $10 per share. The market value of the preference shares without the warrants is $90.

Required:

Question 1. What amount should be assigned to the share warrant issued

Question 2. Assuming that only 80% of the warrants are exercised. what is the entry to record the exercise of the warrants?

Reference no: EM132563589

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