Which Statement Best Describes the "Proportional Method

question 60

Multiple Choice

Which statement best describes the "proportional method"?

• A)Under this method of accounting, for a convertible bond, all of the bond value would be counted as a liability.
• B)Under this method of accounting, for a convertible bond, the issuing entity would record a liability for the estimated value of the bond without the conversion feature.
• C)Under this method of accounting, for a convertible bond, estimate the fair value of all components and allocate proportionally to them.
• D)Under this method of accounting, the common share component is considered the least reliably measured amount.