Which of the following is/are true?
A)Firms sometimes issue bonds with stock warrants attached and allocate the amount received between the bonds and the warrants based on their respective fair values.
B)When firms issue convertible bonds U.S.GAAP requires firms to allocate the full issue price to the bonds and none to the conversion feature.
C)IFRS requires firms to allocate the issue price between the bonds and the conversion feature.
D)Under IFRS, the firm allocates the issue price of bonds with terms similar to those issued but without the conversion feature to the bonds and the remainder of the issue price to the conversion option.
E)all of the above

Question

Quizplus · Accepted Answer

All statements are true. A) describes a common practice of issuing bonds with stock warrants and allocating the proceeds based on fair values. B) and D) accurately describe the differences in accounting for convertible bonds under U.S. GAAP and IFRS, respectively. C) is a correct statement about IFRS requirements for allocating the issue price between the bonds and the conversion feature.

Which of the Following Is/are True