7. Under U.S. GAAP, issuance of convertible bonds and nonconvertible bonds have the same effect on the balance sheet. a. True b. False

8. Typically, a debit is settled on terms unfavorable to the borrower. a. True b. False

9. Firm owed bank $300K. Bank agreed to settle debt in exchange for land with fair value of $225K. The land was brought for $162K, As a result of the settlement, firms: a. Liabilities decrease by $225K b. Assets decrease by $225K c. Equity decreases by $138K d. Equities decrease by $63K