When convertible bonds are converted to common shares,the carrying value of the bonds is transferred to contributed capital.

Question

Quizplus · Accepted Answer

When convertible bonds are converted into common shares, the carrying value of the bonds is transferred from the liability section of the balance sheet to the equity section, specifically to the contributed capital account. This increases the equity of the company without any additional cash inflow or outflow. Therefore, the statement is true.

When Convertible Bonds Are Converted to Common Shares,the Carrying Value