Chang Corporation issued $6,000,000 of 9%, ten-year convertible bonds on July 1, 2017 at 96.1 plus accrued interest. The bonds were dated April 1, 2017 with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2018, $1,200,000 of these bonds were converted into 500 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion.

What was the effective interest rate on the bonds when they were issued?

9%

Above 9%

Below 9%

Cannot determine from the information given.

Which of the following is an advantage of a restricted-stock plan?

It creates new job opportunities in a company.

It never becomes completely worthless.

It increases the market price of the stock.

It increases the profit of a company.

In accounting for investments in debt securities,

a discount is reported separately.

a premium is reported separately.

any discount or premium is amortized.

None of these answers are correct.

Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the

investor sells the investment.

investee declares a dividend.

investee pays a dividend.

earnings are reported by the investee in its financial statements.

The first step in the process for revenue recognition is to

determine the transaction price.

identify the contract with customers.

allocate transaction price to the separate performance obligations.

identify the separate performance obligations in the contract.