If Convertible Preferred Shares Are Converted into Common Shares

question 126

Multiple Choice

If convertible preferred shares are converted into common shares,

• A) a gain on conversion must be recorded if the legal capital of the preferred shares is greater than the legal capital of the common shares.
• B) a loss on conversion must be recorded if the legal capital of the preferred shares is less than the legal capital of the common shares.
• C) a gain or loss on conversion is not recorded.
• D) the fair value of the preferred shares on the date of conversion is credited to the Common Shares account.

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Definitions:

DNA-Degrading Enzymes

Enzymes that break down deoxyribonucleic acid (DNA), essential in processes such as DNA repair and the recycling of genetic material.

Nucleic Acids

Biomolecules essential for all known forms of life, including DNA and RNA, which carry genetic information and are involved in protein synthesis.

Nucleotides

The basic building blocks of DNA and RNA, consisting of a nitrogenous base, a sugar molecule, and one or more phosphate groups.

Building Blocks

Building blocks are the basic components from which something is constructed or developed, such as the DNA nucleotides for living organisms or basic materials for physical structures.