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ACC327_EX2CH16_StudyGuide

ACC327_EX2CH16_StudyGuide - Chapter 16 Study Guide ACC327...

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Chapter 16 Study Guide – ACC327 -_____________ are securities that are not common stock in form but that enable their holders to obtain common stock upon exercise or conversion. The primary accounting concerns about these securities involve accounting for them at the ______________ and the ______________, or __________________. -____________________ are bonds that may be exchanged for a specific number of common shares at the bondholder’s discretion. They are recorded at issuance the same as _____________________. -On the date of conversion, the _________________ is used to record the conversion. -When bonds are converted, we need to do 2 things: ___________________ & _______________. -When bonds are converted, no ________________ is recognized. -Gabel Company has Bonds Payable Outstanding Shares in the amount of $400,000, and the premium on the Bonds Payable account has a balance of $6,000. Each $1,000 bond is convertible into 20 shares of preferred stock of par value of $50 per share. All bonds are converted into preferred stock. Assume the book value method is used, what is the entry? -When preferred stock is converted, we need to do 2 things: ___________________ & ___________________.
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-Retirement of convertible debt occurs when a company retires its convertible bonds prior to their ______________ or _____________. It is recorded the same as _________________. -The _______________ on retirement will be ordinary or extraordinary, depending on the circumstances. -____________________ is preferred stock that may be converted into a specified number of common stock shares at the preferred holder’s discretion. -Is convertible preferred stock recorded at the date of issuance? If so, how? -When the preferred stock is converted to common stock (on the Date of Conversion), the ____________________ method is used. -Using the above method, what is removed? What does the total amount establish? -Usually, the ____________ of the preferred stock will exceed the ________________ of the common stock issued, and ________________ will be credited . -In the unlikely event that the _____________ of the preferred stock is less than the _________________ of the common stock issued, __________________ is debited for the difference. -Acme Co. has 1,000 shares of convertible preferred stock outstanding. The preferred stock has a par value of $100 per share and was originally issued at $115 per share. Each share of preferred stock is convertible into 5 shares of $1 par common stock. On February 15, one half of the convertible preferred stock is converted. Record this conversion.
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-____________________ are certificates entitling the holder to purchase shares of stock at a specified price within a stated period. -These securities are issued for a variety of reasons. List 3 reasons. - - - -Warrants differ from convertible securities (i.e. bonds and preferred stock) in two ways: - - -_________________________ are attached to debt that may be separately traded from the debt. When these are issued, the proceeds are allocated between the debt and the warrants. The proceeds are allocated because each instrument has __________________. The allocation will be made using either the _____________ method, or the _________________ method. -_______________________ is the preferred method and is used when ______________ can be determined separately for the two instruments (I.e. the bonds and the warrants).
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