On March 1, 2009, Doll Co

question 18

Multiple Choice

On March 1, 2009, Doll Co. issued 10-year convertible bonds at 106. During 2012, the bonds were converted into common stock when the market price of Doll's common stock was 500 percent above its par value. On March 1, 2009, cash proceeds from the issuance of the convertible bonds should be reported as

• A)A liability for the entire proceeds.
• B)Paid-in capital for the entire proceeds.
• C)Paid-in capital for the portion of the proceeds attributable to the conversion feature and as a liability for the balance.
• D)A liability for the face amount of the bonds and paid-in capital for the premium over the par value.Convertible bonds are debt securities reported entirely as a liability.

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Definitions:

Surviving Corporation

The entity that continues to exist after the merger or consolidation of two or more corporations, absorbing the assets and liabilities of the other entities.

Approve

To officially agree to or sanction something, often through a formal process.

Merger

The combination of two or more companies into a single entity, often with the goal of expanding market share or reducing competition.

Merger Plan

is a documented strategy that outlines the process and goals of merging two or more companies into one entity, including the financial, operational, and legal implications.