Question 12 Irene purchased a $1,000 par 5.8 % convertible bond 10 years ago for $1,050. Three years ago, Irene exercised the conversion option and traded the bond for 25 shares of preferred stock. At the time of the conversion, the preferred stock had a market value of $50 per share. The price of the preferred stock has risen to $55 per share, and Irene is considering selling the stock. What is the cost basis for the disposal of the preferred stock shares? $1,150 $1,000 $1.375 $1,250 $1,050
Question 12 Irene purchased a $1,000 par 5.8 % convertible bond 10 years ago for $1,050. Three years ago, Irene exercised the conversion option and traded the bond for 25 shares of preferred stock. At the time of the conversion, the preferred stock had a market value of $50 per share. The price of the preferred stock has risen to $55 per share, and Irene is considering selling the stock. What is the cost basis for the disposal of the preferred stock shares? $1,150 $1,000 $1.375 $1,250 $1,050
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter11: Stockholders' Equity
Section: Chapter Questions
Problem 11.2P
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![Question 12
Irene purchased a $1,000 par 5.8 % convertible bond 10 years ago for $1,050. Three
years ago, Irene exercised the conversion option and traded the bond for 25 shares
of preferred stock. At the time of the conversion, the preferred stock had a market
value of $50 per share. The price of the preferred stock has risen to $55 per share,
and Irene is considering selling the stock. What is the cost basis for the disposal of
the preferred stock shares?
$1,150
$1,000
$1.375
$1,250
O $1,050](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe26c8f8d-7152-4fa4-bb7e-a199e05b3e8e%2F9c5004c5-76e3-4f47-b591-a4a7b62ba866%2Fg5shmz_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 12
Irene purchased a $1,000 par 5.8 % convertible bond 10 years ago for $1,050. Three
years ago, Irene exercised the conversion option and traded the bond for 25 shares
of preferred stock. At the time of the conversion, the preferred stock had a market
value of $50 per share. The price of the preferred stock has risen to $55 per share,
and Irene is considering selling the stock. What is the cost basis for the disposal of
the preferred stock shares?
$1,150
$1,000
$1.375
$1,250
O $1,050
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