A company issues plain vanilla warrants to an outside entity with an exercise price at FMV in return for some advertising. The Company has gone through ASC 480 and determined the warrants are subject to ASC 815-40, and they should be classified in equity. Is there any accounting upon issuance? It seems like there would be no accounting upon issuance (its just an option to purchase shares at FMV) and that upon exercise the following JE would be recorded? Dr - Cash (# of warrants * warrant price) Cr - Equity (# of warrants * warrant price) Am I missing any journal entries here? Also, what if the warrant price is above FMV? Any special accounting for that?
