Wang Inc Has $ 3,000,000 (Par Value), 8% Convertible Bonds Outstanding

question 11

Multiple Choice

Wang Inc. has $ 3,000,000 (par value) , 8% convertible bonds outstanding. Each $ 1,000 bond is convertible into thirty no par value common shares. The bonds pay interest on January 31 and July 31. On July 31, 2020, the holders of $ 900,000 worth of bonds exercised the conversion privilege. On that date the market price of the bonds was 105, the market price of the common shares was $ 36, the carrying value of the common shares was $ 18 and the Contributed Surplus-Conversion Rights account balance was $ 450,000. The total unamortized bond premium at the date of conversion was $ 210,000. Using the book value method, Wang should record, as a result of this conversion,

• A) no gain or loss.
• B) a loss of $ 9,000.
• C) other comprehensive income of $ 9,000.
• D) a gain of $ 18,000.

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A child who is legally underage and not considered capable of taking certain legal responsibilities.

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