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

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

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

Section: Chapter Questions

Problem 8QE

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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
The debt component of convertible bonds issued using IFRS is the a. present value of the future cash flows at the market interest rate b. present value of the future cash flows at the stated interest rate c. market value of similar bonds without a conversion feature d. same as the calculation for GAAP
1. When an entity issued bonds payable with detachable share warrants, how will share premium be computed if the share warrants are exercised by the bondholders? (Choose an answer and explain why) a. It is the balance of the share warrants outstanding. b. It is the sum of the share warrants outstanding and total par or stated value of the shares issued. c. It is the difference between the proceeds received based on the exercise price and the total par or stated value of the shares issued. d. It is the difference between the proceeds received based on the exercise price plus the share warrants outstanding and the total par or stated value of the shares issued.
The share premium recognized on a convertible bond O A. remains in equity only if the bonds are actually converted В. reclassified out of equity to profit or loss if the bonds are not converted O c. remains in equity whether the bonds are actually converted or not O D. recognized as gain or loss on conversion E. becomes part of the bonds payable account
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.
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 earnings per share (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.
Under the cost method, the journal entry to record the repurchase of a treasury share for more than the share's par value will include a debit to O Share Premium-Treasury Shares for the excess of the cost over par value O Accumulated Profits for the excess of the cost over par value O Treasury Shares for the cost of treasury share Share Premium-Treasury Shares for the cost of treasury share
Bonds that permit the bondholder to exchange the bonds into shares of common stock at a fixed price are called a. Callable bond b. Debenture c. Convertible bond d. Indenture
Under the incremental method the proceeds from the sale of debt with detachable stock warrants should be allocated to the bonds based on: face value of the bonds if known. the proportionate share of the fair market value of the bonds to the total fair market value of the bonds and stock warrants. face value of the bonds and market value of the warrants. the fair market value of the bonds if known.
When convertible debt is retired by the issuer, any material difference between the cash acquisition price and the carrying amount of the debt should be ________. treated as a prior period adjustment treated as an adjustment of additional paid-in-capital reflected currently in income
1. A share lending agreement (a) usually stipulates that the dividends, paid by the issuing company to the security lender, are passed onto the security borrower. (b) stipulates the interest rate paid by the security borrower to the security lender. (c) guarantees that the voting right is kept by the security lender during the loan period. (d) usually stipulates that the equivalent of the dividends on the share lent are paid by the security borrower to the security lender.