ACC432 Final Exam Complete Solution new

Question: #6108

1) Proceeds from an issue of debt securities having stock warrants should NOT be allocated between debt and equity features when

the allocation would result in a discount on the debt security.

the warrants issued with the debt securities are nondetachable.

exercise of the warrants within the next few fiscal periods seems remote.

the market value of the warrants is NOT readily available.

2) The conversion of preferred stock may be recorded by the

market value method.

par value method.

book value method.

incremental method.

3) The conversion of preferred stock into common stock requires that any excess of the par value of the common shares issued over the carrying amount of the preferred being converted should be

treated as a prior period adjustment.

treated as a direct reduction of retained earnings.

reflected currently in income as an extraordinary item.

reflected currently in income, but NOT as an extraordinary item.

4) A primary source of stockholders' equity is

contributions by stockholders.

both income retained by the corporation and contributions by stockholders.

appropriated retained earnings.

income retained by the corporation.

Solution: #6111

ACC432 Final Exam Complete Solution -new

1) Proceeds from an issue of debt securities having stock warrants should NOT be allocated between debt and equity features when A. the allocation would result in a discount on the debt security. B. the warrants issued with the debt securities are nondetachable. C. exercise of the warrants within the ...