The share premium recognized on a convertible bondO A. remains in equity only if the bonds are actually convertedВ.reclassified out of equity to profit or loss if the bonds are not convertedO c. remains in equity whether the bonds are actually converted or notO D. recognized as gain or loss on conversionE. becomes part of the bonds payable account Upon conversion of convertible bonds,A.no gain or loss is recognizedB. any share premium recognized on the conversion feature is transferred directlyto retained eamingsO c. any unamortized discount is derecognized by a debitD. gain on conversion is recognizedO E. loss on conversion feature is transferred to retained earning

SOLUTION- SHARE PREMIUM IS THE CREDITED DIFFERENCE IN THE PRICE BETWEEN THE PAR VALUE OR FACE VALUE…

Answered: The share premium recognized on a…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4MC: A convertible bond can be converted into ________. A. preferred stock B. common stock and then...

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A convertible bond can be converted into ________. A. preferred stock B. common stock and then converted into preferred stock C. common stock of a different company D. common stock of the company
In case of payment of convertible bonds, the balance of Share Premium - Conversion Privilege account shall be closed to A.Bonds Payable B.Share Premium - Issuance C.Premium or Discount on Bonds Payable D.Gain or loss on extinguishment
In an equity swap where a liability is settled through the issuance of equity securities A.no gain or loss is recognized B.gains are recognized as Share Premium, losses are expensed. C.gain or loss is recognized as the difference between the measurement amount of the equity securities issued and the carrying amount of the liability derecognized D.any apparent gain or loss is recognized in equity as an addition to share premium
The Share Premium arising from the conversion of bonds can be computed by deducting the par value of the issued shares from the sum of the following, except a.)Conversion Privilege Premium, only to the extent converted b.)Carrying amount of the convertible bonds c.)All of these are added to get the Share Premium d.)Cash received from the conversion
When the conversion of bonds payable to common stock is recorded under the market value method and the market value of the common stock exceeds the book value of the bonds at date of conversion, the difference is recorded as a debit to Loss on Conversion. debit to Additional Paid-in Capital−Common Stock. debit to Discount on Bonds Payable. debit to Retained Earnings.
In an "equity swap," where a liability is settled through the issuance of equity securities, a. no gain or loss is recognized b. any apparent gain or loss is recognized in equity as an addition to share premium c. gain or loss is recognized as the difference between the measurement amount of the equity securities issued and the carrying amount of the liability derecognized. d. a and b
______________ allows the investor to transform debt into equity under certain circumstances. a. Equity shares b. Non-convertible bonds c. Equity debentures d. Convertible bond
Bond premium should be reported in the statement of financial position A. at the present value of the future reduction in bond interest expense due to the premium. B. as a direct addition to the face amount of the bonds. C. as a deferred credit. D. along with other premium accounts such as those resulting from share capital transactions.
With regard to the measurement of a convertible bond issue, which of the following statements is correct?a. IFRS requires the use of the relative fair value method for the bond and the convertible feature b. IFS requires all proceeds be recorded as debt. c. ASPE would not allow the entire proceeds to be credited to bonds payable d. ASPE provides that the amount paid in associated with the conversion feature be either valued at zero or at the differencebetween the amount paid in and the fair value of the bond only as contributed surplus. e. None of the above.
When bondholders decide to exercise their convertible bonds, the company values the common stock at the ________. Assume there is no beneficial conversion option at bond issue. Group of answer choices market value of the stock par value of the stock carrying value of the bonds par value of the bonds
How shall the equity component of a bonds payable issued with share warrants be valued? a.)issue price less the market value of the bonds warrants-on b.)fair value of the share warrants c.)issue price less the market value of the bonds ex-warrants d.)allocation of the issue price basing on the fair value of both bonds and share warrants
When computing diluted EPS, convertible bonds are A. ignored.B. assumed converted whether they are dilutive or antidilutive.C. assumed converted only if they are antidilutive.D. assumed converted only if they are dilutive.

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