When Bonds Include Detachable Warrants, What Is the Appropriate Accounting

question 86

Multiple Choice

When bonds include detachable warrants, what is the appropriate accounting for the cash proceeds from the bond issue?

• A) The proceeds from the bond issue are allocated between the bonds and the warrants on the basis of their relative market values.
• B) The proceeds from the bond issue are allocated between the bonds and the warrants on the basis of their relative face values.
• C) A nominal amount is allocated to the warrants.
• D) All of the proceeds are allocated to the bonds.

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Definitions:

Regression Discontinuity

Regression discontinuity identifies the causal effects of a policy or factor by looking at two samples that lie on either side of a threshold or cutoff.

Causal Effects

Causal effects refer to the change in an outcome directly attributable to a change in a factor or intervention, established through methods that isolate this relation from other variables.

Threshold

The point at which a particular effect or change occurs, often used in context of quantities or levels.

Intention To Treat

A principle used in clinical trials where all patients including those who drop out or deviate from the protocol are accounted for in the final results.