CONVERTIBLE BONDS

Question 1

Sale, Own bond or Purchase a Bond the loss or Gain is

Answer 1

Income before extraordinary Items

Question 2

Bond Discount amortization effect

Answer 2

Increase Carry amount, Increase Interest Expense, Decrease Net Income

Question 3

Bond Premium amortization effect

Answer 3

Drecrease Carry amount, Decrease Interest expense , Increase Net INcome

Question 4

Straing line metroho at Discount compare to Effective

Answer 4

Interest Hight, Dct Amortization Hight. Carry Amount is OVERSTATE., Income Retaine Earning UNDERSTATED.

Question 5

Effective Method at Discount compare Straing line

Answer 5

Interest Low, Discount amortization Low, Carry amount UNDERSTATE, Income Retained Earning OVERSTATE.

Question 6

Bond Issue at face for 15 year is retired at 10 years what is the effect

Answer 6

Liability increase by excees of bond over 15 years

Question 7

Detachable bond method converted

Answer 7

Market Value( FV BOnd, FV Warrant) Warrant ( Warrant)

Question 8

Detachable bond issue

Answer 8

Cash, Bond, APIC, Dct/ Premuim( Squezze)

Question 9

Detachable converted

Answer 9

Both method, cash, Common, APIC( Warrant) APIC( squezze)

Question 10

Nondetachable Bond Issue

Answer 10

Cash, Bond, Dct/ Premium

Question 11

Nondetachable Bond Method

Answer 11

Book Value, Market Value

Question 12

Nondetachable Bond Book Value converted

Answer 12

Bond Payable, Premium, Commom, APIC( Squeeze) NO LOSS- NO GAIN

Question 13

Nondetachable Bond Method calculate LOSS, GAIN

Answer 13

Market Value

Question 14

Wich Detachable and Nondetachable calculate Loss- Gain . and which method is used

Answer 14

Nondetachable- Market Value

Question 15

How to calculate Warrants

Answer 15

Each $ 1000 Bond was issued 400 detachable bond at market value $4 shares.

Question 16

Retire Bond

Answer 16

Bond ( Face), Discount( Unamortized), Issue( Unamortized), Cash( Retire 93%), GAIN.

Question 17

Bond issued Jan 1 y1 $ 93,770 Face $ 100,000 Callable $96.000 Retire $ 94,582 Retire Journal Entry:

Answer 17

Bond ( $ 100,000Face ) Disct ( ( $ 100,000-$ 94,582), Cash ($96,000 Retire) Loss $ 1,418