Exercise of the conversion option on convertible debt

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Reference no: EM131288105

1. On the Statement of Cash Flows, the exercise of the conversion option on convertible debt would be:

a) Included as part of Operating Activities inflows

b) Included as part of Investing Activities inflows

c) Included as part of Financing Activities inflows

d) excluded from statement but disclosed if material.

2. Identify which of the following is an accurate description of the proper accounting treatment or the ongoing valuation basis.

a) Market value and Par value are the same thing and are used to record common stock

b) Stock issued for property is recorded at the Par Value of the stock given or the FV of the asset received, whichever is more clearly evident.

c) A Paid-In-Capital account is used for the excess of par value over cash received.

d) The Relative Fair Value approach is used to split proceeds between multiple types of shares, if fair values are available.

Reference no: EM131288105

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