Question
ABC Ltd. has a $1,000,000 face value bond issue outstanding, the carrying value of which is $975,000. Since interest rates have fallen since the bond
ABC Ltd. has a $1,000,000 face value bond issue outstanding, the carrying value of which is $975,000. Since interest rates have fallen since the bond was issued, the fair value of the bond is now $985,000. ABC wishes to reduce its interest costs, and offers the bondholders a sweetener of $15,000 over fair value as an induced conversion. What will ABC record as a capital transaction, under ASPE, as a result of this induced conversion?
A : $10,000
B : $15,000
C : Nothing
D : $5,000
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Stats Data And Models
Authors: Richard D. De Veaux, Paul D. Velleman, David E. Bock
4th Edition
321986490, 978-0321989970, 032198997X, 978-0321986498
