Which statement is not correct for the "proportional method"?
A)Under this method of accounting,for a convertible bond,all of the bond value would be counted as a liability.
B)Under this method of accounting,for a convertible bond,the issuing entity would record a liability for the estimated value of the bond without the conversion feature.
C)Under this method of accounting,for a convertible bond,an estimate would be made of the fair value of all components and allocated proportionally to all components.
D)Under this method of accounting,the common share component is considered the most reliably measured amount.

Question

Quizplus · Accepted Answer

The statement that the common share component is considered the most reliably measured amount is not correct. In fact, the bond component is typically considered the most reliably measured amount because it is based on observable market prices for similar bonds.

Which Statement Is Not Correct for the "Proportional Method