A gain or loss on the conversion of bonds payable to common stock would be recognized when using the $\begin{array}{lll}
& \text {Book Value Method}& \text {Market Value Method}\
\text { I. } & \text { Yes } & \text { No } \
\text { II. } & \text { Yes } & \text { Yes } \
\text { III. } & \text { No } & \text { No } \
\text { IV } & \text { No } & \text { Yes }
\end{array}$
A)I
B)II
C)III
D)IV

Question

A gain or loss on the conversion of bonds payable to common stock would be recognized when using the $\begin{array}{lll}
& \text {Book Value Method}& \text {Market Value Method}\
 \text { I. } & \text { Yes } & \text { No } \
\text { II. } & \text { Yes } & \text { Yes } \
\text { III. } & \text { No } & \text { No } \
\text { IV } & \text { No } & \text { Yes }
\end{array}$
A)I
B)II
C)III
D)IV

Quizplus · Accepted Answer

Under the Book Value Method, no gain or loss is recognized on the conversion of bonds payable to common stock. Under the Market Value Method, a gain or loss is recognized based on the market value of the stock issued.

A Gain or Loss on the Conversion of Bonds Payable