If the Accountant Cannot Objectively Measure the Value of the Stock

question 123

Multiple Choice

If the accountant cannot objectively measure the value of the stock warrants separately from the value of the bond or preferred stock at date of issuance, the accountant credits

• A)the full purchase price to the bond or preferred stock and none of the price to the common stock warrant.
• B)95 percent of the purchase price to the bond or preferred stock and 5 percent of the price to the common stock warrant.
• C)90 percent of the purchase price to the bond or preferred stock and 10 percent of the price to the common stock warrant.
• D)85 percent of the purchase price to the bond or preferred stock and 15 percent of the price to the common stock warrant.
• E)80 percent of the purchase price to the bond or preferred stock and 20 percent of the price to the common stock warrant.

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Definitions:

Null Hypothesis

The default hypothesis that there is no effect or no difference, and it is tested against an alternative hypothesis.

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Alternative Hypothesis

A statement that proposes a relationship between variables, opposite to the null hypothesis, indicating a significant effect or difference.

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