At the preceding year end, Irvining Corp issued 8%, $500,000 face amount convert
ID: 2523626 • Letter: A
Question
At the preceding year end, Irvining Corp issued 8%, $500,000 face amount convertible bonds that mature in 10 years. Interest is payable at each subsequent year end. Each $1,000 bond is convertible to 50 shares of Irvining common stock, which has a par value of $10 per share. The unamortized discount on the bonds 1 year after issuance was $30,000. On that date, 300 of the bonds were converted when the market value of lrvining common stock was $20 per share. Under the book-value method, Irvining should:
A. Recognize a gain of $18,000.
B. Credit both common stock and additional paid-in capital for $150,000.
C. Credit common stock for $150,000 and additional paid-in capital for $450,000.
D. Credit common stock for $150,000 and additional paid-in capital for $132,000.
Please help with this problem in details. Thank you!
Explanation / Answer
Answer
C . credit comman stock for 150000 and additional paid in capital for 450000
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