An Adjustment to Retained Earnings as a Result of a Conversion

question 79

Multiple Choice

An adjustment to retained earnings as a result of a conversion of preferred stock to common stock most likely would occur when

• A) par value of the preferred stock is high relative to fair value of the common stock.
• B) par value of the common stock is less than the book value of the preferred stock.
• C) par value of the common stock exceeds the book value of the preferred stock.
• D) par value of the preferred stock is low relative to fair value of the common.

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