Outstanding bonds payable are converted into common stock.Under either the book value or market value method,the same amount would be debited to Bonds Premium on
Payable Bonds Payable

Question

Quizplus · Accepted Answer

When bonds payable are converted into common stock, both the book value method and the market value method would involve debiting the same amount to Bonds Premium on Payable, if there is a premium on the bonds. This is because the premium is an integral part of the bonds' carrying value, which must be removed from the balance sheet upon conversion, regardless of the method used.

Outstanding Bonds Payable Are Converted into Common Stock