When a company offers bondholders a sweetener to induce them to convert their bonds to common stock, the cost of this inducement is reflected in the

Question

Quizplus · Accepted Answer

The cost of inducing bondholders to convert their bonds to common stock would be reflected as an expense in the "other revenue/expense" section of the income statement, as it is not a typical operating expense and is not considered an extraordinary item. The common stock account on the balance sheet would only be impacted by the increase in the number of shares due to the conversion, not the cost of the inducement.

When a Company Offers Bondholders a Sweetener to Induce Them