Acc372_Kieso13e_Ch16 - DilutiveSecuritiesand...

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Dilutive Securities and  Earnings Per Share Kieso 13e Chapter 16
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Debt and equity Debt and equity (LO1) Convertible debt (LO1) Convertible debt (LO2) Convertible (LO2) Convertible preferred stock preferred stock (LO3) Stock warrants (LO3) Stock warrants (LO4, 5) Accounting for (LO4, 5) Accounting for compensation compensation Dilutive Securities and Dilutive Securities and Compensation Plans Compensation Plans Computing Earnings Per Computing Earnings Per Share Share (LO6) Simple capital (LO6) Simple capital structure structure (LO7) Complex capital (LO7) Complex capital structure structure Dilutive Securities and Earnings Per Share Dilutive Securities and Earnings Per Share
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Dilutive Securities Securities that are not common stock in  form but that enable their holders to obtain  common stock upon exercise or  conversion. Convertible bonds Convertible preferred stocks Warrants Contingent shares
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Convertible Debt Issuance, interest payment, amortization of  premium or discount, and retirement (instead  of conversion) are the same as any other  bond. Conversion recorded using the book value  approach. The book value (=face value + unamortized  premium  or less unamortized discount) of the  bonds payable is removed from the account. No gain or loss is recorded. Induced conversions: Additional  consideration (sweetener) given to induce  conversion should be recognized as an  expense of the current period.
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Certificates entitling the holder to acquire  shares of stock at a certain price within a  stated period Nondetachable warrants No allocation of proceeds between the bonds and  the warrants. Companies record the entire proceeds as debt.
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Acc372_Kieso13e_Ch16 - DilutiveSecuritiesand...

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