On August 31 2018. Chickasaw Industries issued $25 million of its 30-year, 6% convertible bonds dated August 31, priced to yield 5%. The bonds are convertible at the option of the investors into 1,500,000 shares of Chickasaw's common stock. Chickasaw records Interest expense at the effective rate On August 31, 2021, Investors in Chickasaw's convertible bonds tendered 20% of the bonds for conversion into common stock that had a market value of $20 per share on the date of the conversion. On January 1, 2020, Chickasaw Industries issued $40 million of its 20-year, 7% bonds dated January 1 at a price to yield 8%. On December 31, 2021, the bonds were extinguished earty through acquisition in the open market by Chickasaw for $40.5 million Required: 1. Using the book value method, does the conversion of the 6% convertible bonds into common stock result in a gain, a loss or no gain oric 2. Using the market value method, by how much does the conversion of the 6% convertible bonds into common stock result in a gain, a loss, or no gain or loss? 3. Were the 7% bonds issued at face value at a discount, or at a premium? 4. In the second year of the term to maturity, win the amount of interest expense for the 7% bonds be higher than lower than or the same as in the first year? 5. Does the early extinguishment of the 7% bonds result in a gain, a loss, or no gain or loss? Complete this question by entering your answers in the tabs below. Required: Required 2 Required) Required 4 Required Using the market value method, by how much does the conversion of the 6% convertible bonds into common stock result in again, a loss, or no gain or loss? (Enter your answers in millions (1.6. 10,000,000 should be entered as 10).) Roni o con s 5 milion On August 31, 2018. Chicksaw Industries Issued $25 million of its 30-year. 6% convertible bonds dated August 31. priced to yleld 5% The bonds are convertible at the option of the investors into 1,500,000 shares of Chickasaw's common stock. Chickasaw records Interest expense at the effective rate On August 31, 2021, investors in Chickasaw's convertible bonds tendered 20% of the bonds for conversion into common stock that had a market value of $20 per share on the date of the conversion. On January 1, 2020. Chickasaw Industries issued $40 million of its 20-year, 7% bonds dated January 1 at a price to yield 8%. On December 31, 2021, the bonds were extinguished earty through acquisition in the open market by Chickasaw for $40.5 million Required: 1. Using the book value method, does the conversion of the 6% convertible bonds into common stock result in a gain a loss, or no gain or los 2. Using the market value method, by how much does the conversion of the 6% convertible bonds into common stock result in a gain, a loss, or no gain or loss? 3. Were the 7% bonds issued at face value, at a discount, or at a premium? 4. In the second year of the term to maturity, will the amount of Interest expense for the 7% bonds be higher than, lower than or the same as in the first year? 5. Does the early extinguishment of the 7% bonds result in a gain, a loss, or no gain or loss? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required Required 4 Required 5 Using the book value method, does the conversion of the 6% convertible bonds into common stock result in a gain, a loss, or no gain or loss? Result of conversion Loss Required 2 > Gain LOSS No gain or loss On August 31, 2018. Chickasaw Industries issued $25 million of its 30-year, 6% convertible bonds dated August 31, priced to yield 5% The bonds are convertible at the option of the investors into 1,500,000 shares of Chickasaw's common stock. Chickasaw records Interest expense at the effective rate. On August 31, 2021, Investors in Chickasaw's convertible bonds tendered 20% of the bonds for conversion into common stock that had a market value of $20 per share on the date of the conversion. On January 1, 2020, Chickasaw Industries issued $40 milion of its 20-year, 7% bonds dated January 1 at a price to yield 8%. On December 31, 2021. the bonds were extinguished early through acquisition in the open market by Chickasaw for $40.5 million Required: 1. Using the book value method, does the conversion of the 6% convertible bonds into common stock result in a gain, a loss, or no gain or loss? 2. Using the market value method, by how much does the conversion of the 6% convertible bonds into common stock result in a gain, a loss, or no gain or loss? 3. Were the 7% bonds issued at face value, at a discount, or at a premium? 4. In the second year of the term to maturity, will the amount of interest expense for the 7% bonds be higher than, lower than, or the Same as in the first year? 5. Does the early extinguishment of the 7% bonds result in a gain, a loss, or no gain or loss? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Were the 7% bonds issued at face value at a discount, or at a premium? Issued at Discount Discount Premium On August 31, 2018. Chickasaw Industries issued $25 million of its 30-year, 6% convertible bonds dated August 31, priced to yield 5 The bonds are convertible at the option of the investors into 1,500,000 shares of Chickasaw's common stock. Chickasaw records Interest expense at the effective rate. On August 31, 2021, Investors in Chickasaw's convertible bonds tendered 20% of the bonds conversion into common stock that had a market value of $20 per share on the date of the conversion. On January 1, 2020. Chicka Industries issued $40 milion of its 20-year, 7% bonds dated January 1 at a price to yield 8%. On December 31, 2021, the bonds were extinguished early through acquisition in the open market by Chickasaw for $40.5 million Required: 1. Using the book value method, does the conversion of the 6% convertible bonds into common stock result in a gain a loss, or no gain or loss? 2. Using the market value method, by how much does the conversion of the 6% convertible bonds into common stock result in a ga a loss, or no gain or loss? 3. Were the 7% bonds issued at face value, at a discount, or at a premium? 4. In the second year of the term to maturity, will the amount of interest expense for the 7% bonds be higher than, lower than, or the same as in the first year? 5. Does the early extinguishment of the 7% bonds result in a gain, a loss, or no gain or loss? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required Required 5 In the second year of the term to maturity will the amount of interest expense for the 7% bonds be higher than, lower than or the same as in the first year? Interest expenses Sama Required 3 Required) Higher Lower Same On August 31, 2018, Chickasaw Industries issued $25 million of its 30-year, 6% convertible bonds dated August 31, priced to yield 5% The bonds are convertible at the option of the investors into 1,500,000 shares of Chickasaw's common stock Chickasaw records interest expense at the effective rate On August 31, 2021. Investors in Chickasaw's convertible bonds tendered 20% of the bonds for conversion into common stock that had a market value of $20 per share on the date of the conversion on January 1, 2020. Chickasaw Industries issued $40 million of its 20-year, 7% bonds dated January 1 at a price to yield 8% On December 31, 2021, the bonds were extinguished earty through acquisition in the open market by Chickasaw for $40.5 million Required: 1. Using the book value method, does the conversion of the 6% convertible bonds into common stock result in a gain, a loss or no gain or los 2. Using the market value method, by how much does the conversion of the 6% convertible bonds into common stock result in a gain. a loss, or no gain or loss? 3. Were the 7% bonds issued at face value at a discount, or at a premium? 4. In the second year of the term to maturity. Will the amount of interest expense for the 7% bonds be higher than, lower than or the same as in the first year? 5. Does the early extinguishment of the 79 bonds result in a gain, a loss, or no gain or loss? Complete this question by entering your answers in the tabs below. Required 1 Required Required 3 Required 4 Required 5 Does the early extinguishment of the 7% bonds result in a gain, a loss, or no gain or loss? Relatly extingshment Loss Gain LOSS No gain or loss