On April 1, 2010, the bondholders of Vick, Inc.exchanged convertible bonds for common stock.Vick's carrying amount of these bonds was less than the market value but greater than the par value of the common stock issued upon conversion.If Vick used the book value method of accounting for the conversion, which of the following occurred as a result of recording this conversion?

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Quizplus · Accepted Answer

Under the book value method, the bonds are converted at their carrying amount which is less than the market value of the common stock issued. This results in a positive adjustment to stockholders' equity, as the value of the issue is greater than the carrying amount of the bonds. Therefore, stockholders' equity increases as a result of the conversion.

On April 1, 2010, the Bondholders of Vick, Inc