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…

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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Similar questions

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
T or F -Under generally accepted accounting principles, gain or loss must be recognized on the conversion of bonds into equity securities. -A discount on bond payable is charged to interest expense using the effective interest method.
Any unamortized premium should be reported on the balance sheet of the issuing corporation as a. paid-in capital b. a direct deduction from the face amount of the bonds in the Liabilities section c. an addition to the face amount of the bonds in the Liabilities section d. a direct deduction from retained earnings
Which of the following would NOT be included in the journal entry to show the conversion of bonds payable? O A credit to additional paid in capital O A debit to bonds payable O A debit to bond premium O A credit to gain on conversion
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.
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.
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
The balance in Unamortized Premium on Bonds Payable should be O a. reported separately in the Current Liabilities section of the talance sheet. O b. added to the face amount of the related bonds payable on the balance sheet, O C. reported in the Paid-In Capital section of the balance sheet. Od. reported on the balance sheet as a deduction from the face amount of the related bonds payable.
A convertible debt refers to equity interest that can be converted to debt. O True O False
When a company redeems bonds at a premium to carrying value, that activity is usually classified as: a. operating b. financing c. investing
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
Puttable bonds are the bonds which are redeemed only on the liquidation of the company. T/F?

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