Practicing Success
Which of the following is not a characteristic of share warrants? |
Conversion into shares Specified date and rate for conversion Representing the right to receive interest Issued against amounts received by the company |
Representing the right to receive interest |
Share warrants are financial instruments issued by a company to raise capital. These warrants allow the holders to convert the amount invested into shares at a predetermined date and rate. When the company receives money against the issuance of share warrants, it is disclosed separately as a distinct line item under the 'Shareholder's Fund' in the financial statements. Share warrants grant the holders the option to convert their investment into shares, providing them with an opportunity to become shareholders at the agreed terms. The company issues these warrants to attract investors and raise funds for its operations and expansion. To maintain transparency and clarity in financial reporting, the amount received against share warrants is clearly distinguished and reported under 'Shareholder's Fund' as a separate line item, reflecting its significance in the overall financial structure of the company. |