Statements characterizes convertible debt

Assignment Help Financial Accounting

Reference no: EM131219106

Which of the following statements characterizes convertible debt?

a. The transaction should be recorded as the issuance of stock.

b.The issuer's stock price is less than market value when the debt is converted.

c. No value is assigned to the conversion feature when convertible debt is issued.

d.The holder of the debt must be repaid with shares of the issuer's stock

Bonds with detachable stock warrants were issued by Flack Co. Immediately after issue the aggregate market value of the bonds and the warrants exceeds the proceeds. Is the portion of the proceeds allocated to the warrants less than their market value, and is that amount recorded as contributed capital?

I. Less than warrants' market value

II. Contributed capital

a. I only.

b. Neither I nor II.

c. Both I and II.

d. II only

Reference no: EM131219106

Questions Cloud

Businesses using the resources of a venture capitalist : Assess the challenges for businesses using the resources of a venture capitalist, given that significant returns on the investment are likely to be impacted by the firm. Indicate how a business can manage these expectations. Provide support for your ..

Calculate the increase in net working capital : Ajax Ltd, in 2012, reported an amount of $45m in Accounts Receivable, which was up from $39m in the previous year. Inventories were also up on the previous year, being $25m in 2012 as compared with $21m in 2011. This investment in working capital w..

Risk free rate as represented by current yield to maturity : You have estimated the beta of Ajax Ltd against the ASX200 as being 1.2. The average risk premium for the Australian market you estimate to be 6% and the risk free rate as represented by the current yield to maturity of an Australian government 10-y..

Calculate cash conversion cycle : Based on the information in the table, and using a 365-day year, Calculate cash conversion cycle.

Statements characterizes convertible debt : Which of the following statements characterizes convertible debt? Immediately after issue the aggregate market value of the bonds and the warrants exceeds the proceeds. Is the portion of the proceeds allocated to the warrants less than their market v..

What is the annual stated interest rate for debenture bonds : Clio Co. issued 5-year $500,000 debenture bonds on January 2. The bonds pay interest semiannually. Clio uses the effective interest method to amortize bond premiums and discounts. What is the annual stated interest rate for the debenture bonds?

Inventory balances at the end of first month of operations : The following events took place for Video Wave Manufacturing Company during January 2016, the first month of its operations as a producer of digital video monitors: Prepare the January 2016 income statement for Video Wave Manufacturing Company. Refer..

Prepare the entry to record bad debts expense for the period : At the beginning of the current period, Emler Corp. had balances in Accounts Receivable of $200,000 and in Allowance for Doubtful Accounts of $9,000 (credit). Prepare the entries to record sales and collections during the period. Prepare the entry t..

Calculate the net present value of a business deal : Calculate the net present value of a business deal that costs $2,500 today and will return $1,500 at the end of this year and $1,700 at the end of the following year. Use an interest rate of 13%

User Account

All Pages