On January 1, 2013, Angle Products issued $24,000 of ten-year bonds at 98. These bonds were each convertible into ten shares of $100 par common stock. On January 1, 2020, Angle converted two-thirds of these bonds when the common stock was selling at $130 a share. What would be the loss on bond conversion?

Question

Quizplus · Accepted Answer

There is no loss on bond conversion as the common stock was selling at $130 a share, which is higher than the conversion price of $100 per share. Therefore, the bondholders would have no incentive to convert their bonds into common stock if it resulted in a loss.

On January 1, 2013, Angle Products Issued $24,000 of Ten-Year