A company has convertible bonds outstanding. The book value of the bonds

(net of the unamortized discount) is $ 93,500. To encourage bondholders to convert

bonds, the company offers you a cash incentive in the amount of

$ 10,000. If the bondholders accept the incentive and convert the bonds into stocks, the

$ 10,000 will be accounted for as:

to. Spending

b. Increase in Additional paid-in capital

c. "A" or "b", at the choice of management

d. Neither "a" nor "b"