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22 Cards in this Set
- Front
- Back
Convertible Bonds |
May be exchanged for equity securities |
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The conversion of bonds is most commonly recorded by the |
Book value method |
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When a bond issuer offers some form of additional consideration, the sweetener is accounted for as an |
Expense |
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Corporations issue convertible debt for two main reasons. One is the desire to raise capital that, assuming conversion, will arise when the original debt is converted. The other is: |
That many corporations can obtain financing at lower rates. |
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When convertible debt is retired by the issuer, any material difference between the acquisition price and the carrying amount of the debt should be |
Reflected currently in income, but now as an extraordinary item. |
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The conversion of preferred stock into common requires that any excess of the par of the common shares issued over the carrying amount of the preferred being converted should be |
Treated as a direct reduction of retained earnings. |
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The conversion of preferred stock may be recorded by the |
Book value method |
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When the cash proceeds from a bond issues with detachable stock warrants exceed the sum of the par value of the bonds and the fair market value of the warrants, the excess should be credited to |
Premium on bonds payable |
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Proceeds from an issue of debt securities having stock warrants should not be allocated between debt and equity features when |
The warrants issued with the debt securities are nondetachable |
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Stock warrants outstanding should not be classified as |
Liabilities, reductions of capital contributed in excess of par value, or assets. |
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A corporation issues bonds with detachable warrants. The amount to be recorded as paid-in capital is preferably |
Based on the relative market values of the two securities involved. |
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The distribution of stock rights to existing common stockholders will increase paid-in capital at the |
Date of exercise of the rights and not the date of issuance of the rights. |
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The major difference between convertible debt and stock warrants is that upon exercise of the warrants |
The holder has to pay a certain amount of cash to obtain the shares. |
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Which of the following is not a characteristic of a noncompensatory stock option plan? |
Unlimited time period permitted for exercise of an option as long as the holder is still employed by the company. |
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The date on which to measure the compensation element in a stock option granted to a corporate employee ordinarily is the date on which the employee |
Is granted the option |
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Compensation expense resulting from a compensatory stock option plan is generally |
Allocated to the periods benefited by the employee's required service. |
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The date on which total compensation expense is computed in a stock option plan is the date |
Of grant |
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What are some characteristics of noncompensatory stock purchase plans? |
It is open to almost all full-time employees, the discount from market price is small, the plan offers no substantive option feature. |
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Under the intrinsic value method, compensation expense resulting from an inventive stock option is generally |
Allocated to the periods benefited by the employee's required service. |
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For the stock appreciation rights, the measurement date of computing compensation is the date |
Of exercise |
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An executive pays no taxes of time of exercise in an |
Incentive stock option plan |
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A company estimates the fair value of SARs, using an option-pricing model, for |
Share-based liability awards |