Chapter_16_Notes_#1_On_Dilutive_Securities_And_Earnings_Per_Share

Chapter_16_Notes_#1_On_Dilutive_Securities_And_Earnings_Per_Share

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Acct 3021-Chapter 16 August 23, 2011 1) Slides for Overview of Chapter: 2) Dilutive Securities: Securities, which are not common, stock in form but enable their holders to obtain common stock upon exercise or conversion. 1. (L.O. 1) Accounting for convertible debt: A convertible bond combines the benefits of a bond with the privilege of exchanging it for stock at the holder’s option. a. Issuance: recorded the same as issuance of any other bond. b. Interest dates: recorded the same as any other bond. c. Conversion recorded using the book value approach. Under this approach, the book value of the bonds payable is removed from the accounts and is replaced by the common stock issued. d. If retired for cash, instead of converted, recorded the same as the retirement of any other bond. e. Induced conversions: Additional consideration given to induce conversion should be recognized as an expense of the current period.
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This note was uploaded on 02/12/2012 for the course ACCT 3021 taught by Professor Delaune during the Fall '06 term at LSU.

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Chapter_16_Notes_#1_On_Dilutive_Securities_And_Earnings_Per_Share

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