A Bond with a Carrying Value of $790,000 Was Converted

question 7

Multiple Choice

A bond with a carrying value of $790,000 was converted into 100,000 shares of $5 per share par value common stock at a time when the market value per share was $9.00 per share.Which of the following statements does not accurately describe the financial accounting for the conversion?

• A)A loss of $110,000 will be recognized if the market value method of recording the conversion is used.
• B)Total owners' equity increases $790,000 if the market value method of recording the conversion is used.
• C)Total owners' equity increases $790,000 if the book value method of recording the conversion is used.
• D)Total owners' equity increases $900,000 if the market value method of recording the conversion is useD.

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