On July 1, 2020, an Interest Payment Date, $ 180,000

question 37

Multiple Choice

On July 1, 2020, an interest payment date, $ 180,000 (par value) of Lusaka Corp. bonds were converted into 3,600 of their no par common shares. At this time, the unamortized discount on the bonds was $ 7,200. When the bonds were originally issued, the equity portion of the bond was valued at $ 1,700. Using the book value method, Lusaka would record

• A) an $ 174,500 increase in Common Shares.
• B) an $ 172,800 increase in Common Shares.
• C) an $ 171,100 increase in Common Shares.
• D) no change to Contributed Surplus.

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Definitions:

Duopolist

One of two firms in a market where only two firms offer a particular product or service, leading to a specific form of competition.

Cartel Agreement

An arrangement among competing firms to control prices or exclude entry of a new competitor in the market, often through setting production levels or dividing markets.

Nash Equilibrium

A concept in game theory where no player can benefit by unilaterally changing their strategy if the strategies of the others remain unchanged.

Dominant Strategy

A strategy in game theory that provides the best outcome for a player, regardless of the strategies chosen by other players.