Which of the following statements about callable debentures is true?
A)Callable debentures give the issuer the flexibility to pay off the debentures whenever it benefits the company.
B)Whether the debentures are called or purchased,the journal entry is the same.
C)The call price is usually 100 or a few percentage points above maturity value to provide an incentive to the debenture holder.
D)All of the above

Question

Quizplus · Accepted Answer

A) Callable debentures do provide the issuer with the flexibility to pay off the debentures early if it benefits the company. 
B) The journal entry would not be the same if the debentures were called or purchased, as they have different accounting treatments. 
C) The call price is typically set above the maturity value to provide an incentive for debenture holders to continue holding until maturity.

Therefore, statement D is correct - all of the statements are true.

Which of the Following Statements About Callable Debentures Is True