Company A (buyer) enters into agreement with Company B to buy certain goods worth $1M. Company A issues shares worth $1M and warrants worth $0.5M to Company B. The cash received by Company A by issuing shares and warrants to Company B are utilized to make payment to Company B to purchase tools to manufacture products to be sold to Company A.
Questions:
1. What should be the accounting entries in the books of Company A for issuance of shares and warrants and also for payment made to company B considering production has not started yet at the end of the financial year. 2. What should be price at which shares are recorded considering Company A is not listed?
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