Examlex

Solved

Johannesburg Corp

question 17

Multiple Choice

Johannesburg Corp.has two issues of securities outstanding: no par value common shares and 8% convertible bonds with a par value of $8,000,000.Bond interest payment dates are June 30 and December 31.The conversion clause in the bond indenture entitles the bondholders to receive 40 common shares in exchange for each $1,000 bond.The value of the equity portion of the bond issue is $60,000.On June 30, 2017, the holders of $1,200,000 par value bonds exercise the conversion privilege.The market price of the bonds on that date is $1,100 per bond and the market price of the common shares is $35.The total unamortized bond discount at the date of conversion is $500,000.In applying the book value method, what amount should Johannesburg credit to Common Shares as a result of this conversion?


Definitions:

Terminal Illness

A terminal illness is a disease or condition that is considered incurable and is likely to lead to death.

Credible Evidence

Information or testimony that is believable and reliable, often used in the context of legal proceedings or scientific research.

Reaction Formation

A defense mechanism where an individual unconsciously transforms an undesirable thought or feeling into its opposite.

Defense Mechanism

Psychological strategies used by individuals to cope with reality and maintain self-image by unconsciously denying or distorting reality.

Related Questions