Accounting exam 3 multiple choice

When a restructuring agreement involves only a modification of terms, the carrying value of the liability is compared to the undiscounted future cash payments specified by which of the following new terms? a.If the undiscounted total future cash payments are greater than the carrying value of the liability, the debtor does not recognize a gain, the carrying value of the liability is not reduced, and interest expense is recognized in future periods using an imputed interest rate. b.If the undiscounted total future cash payments are equal to or greater than the carrying value of the liability, the debtor does not recognize a gain, the carrying value of the liability is not reduced, and interest expense is recognized in future periods using an imputed interest rate. c.If the undiscounted total future cash payments are equal to the carrying value of the liability, the debtor does not recognize a gain, the carrying value of the liability is not reduced, and interest expense is recognized in future periods using an imputed interest rate. d.If the undiscounted total future cash payments are less than the carrying value of the liability, the debtor does not recognize a gain, the carrying value of the liability is not reduced, and interest expense is recognized in future periods using an imputed interest rate.

If the undiscounted total future cash payments are equal to or greater than the carrying value of the liability, the debtor does not recognized a gain, the carrying value of the liability is not reduced, and interest expense is recognized in future periods using an imputed interest rate

For stock appreciation rights (SARs) compensation plans where the employee is expected to receive cash on the exercise date, the account that is credited in the year-end adjusting journal entry to recognize the compensation expense is a.SAR Compensation Payable. b.Compensation Expense. c.Common Stock Option Warrants: SARs. d.Deferred Compensation.

SAR compensation payable

Green Corporation issued $400,000 of its 6%, 10-year bonds, dated January 1, 2019, at face value plus accrued interest on April 1, 2019. Interest is paid on January 1 and July 1. The entry to record the sale would include a a.credit to Interest Expense for $6,000. b.credit to Cash for $406,000. c.debit to Cash for $400,000. d.credit to Bonds Payable for $406,000.

a

In a troubled debt restructuring, when a debtor satisfies a liability by exchanging an asset of lesser value, it records the transfer on the basis of the __________ value of the asset and recognizes a __________ on the debt restructuring. a.fair; gain b.book; gain c.book; loss d.fair; loss

a

On January 1, 2019, Pullweed Inc. sells bonds for $108,500 with a face value of $100,000 with an annual yield rate of 10% and stated rate of 12%. Interest is paid on July 1 and January 1. The interest for July 1, 2019, based on the effective interest method will be a.$5,425. b.$6,510. c.$5,000. d.$6,000.

a

The book value of a bond issued at a discount is calculated with which of the following formulas? a.Face Value - Unamortized Discount b.Discount - Face Value c.Bonds Payable Balance - Unamortized Discount d.Face Value + Amortized Discount

a

Under the cost method, Jackson Company purchased back 1,000 shares of $2 common stock for $10. The treasury stock is recorded at a.$10,000. b.$2,000. c.$12,000. d.$8,000.

a

Under the par method, Johnson Corporation is authorized to issue 20,000 shares of $5 par common stock. They issued 7,000 shares of $5 par common stock for $9 per share. The company reacquired 1,000 shares of its common stock at a cost of $12 per share. The amount debited to the Treasury Stock account for the reacquisition is a.$5,000. b.$17,000. c.$7,000. d.$12,000.

a

Widdle Corporation issues 1,000 shares of its $1 par common stock for $10 per share. The amount Widdle will record to the Common Stock account is a.$1,000. b.$11,000. c.$9,000. d.$10,000.

a (1 * 1000)

Penguin Company originally issued $100,000 of 8% bonds at 97 on January 1, 2019. The bonds have a 12-year life, pay interest on January 1 and July 1, and are callable at 104 plus accrued interest. Assume for simplicity that Penguin amortizes the discount by the straight-line method. On June 30, 2024, the company calls the bonds. The entry to record current interest expense, liability, and amortization of the discount that has expired since the last interest payment includes a a.debit to Interest Expense of $4,125. b.debit to Interest Payable of $4,125. c.debit to Interest Expense of $4,000. d.credit to Interest Payable of $4,125.

a (100,000 x 0.08 = 8,000 / 2 = 4,000; 100,000 x 1- 0.97 / 24 = 125; 4000 x 125)

On January 1, 2019, Vaughn Company issues $300,000 of 5-year bonds at par. The bonds have a contract (stated) interest rate of 10% and pay interest semiannually on January 1 and July 1. What would be the July 1, 2019, entry for interest? a. Interest Expense 15,000 Cash 15,000 b. Cash 7,500 Interest Expense 7,500 c. Interest Expense 30,000 Cash 30,000 d. Interest Expense 7,500 Cash 7,500

a (300,000 x 0.10 x 6/12)

Bonds with a face value of $200,000 that are quoted for 103 are selling for a.$206,000. b.$194,000. c.$260,000. d.$200,000.

a (face value x quoted price = 200,000 x 1.03)

When existing corporations issue stock, costs such as legal fees and underwriter's fees are usually accounted for as a.organizational costs. b.a reduction of additional paid-in capital. c.organization expenses. d.a reduction of retained earnings.

a reduction of additional paid in capital

All of the following are normally classified as long-term liabilities except a.pension obligations. b.lease obligations. c.accounts payable. d.bonds payable.

accounts payable

Debt issuance costs such as printing costs, registration fees, and legal fees are reported on the financial statements as a(n) a.addition to Deferred Debt Issuance Costs. b.reduction to Premium on Bonds Payable. c.addition to Discount on Bonds Payable. d.reduction to Deferred Liabilities.

addition to deferred debt issuance costs

Premium on Bonds Payable is a(n) a.contra account. b.liability account. c.adjunct account. d.debit account.

adjunct account

One of the three criteria that must be met for a share purchase plan to be noncompensatory is that all employees who meet limited employment qualifications may participate in the plan on a.a basis of seniority. b.an equal basis. c.the basis of education. d.the basis of pay.

an equal basis

Discount on Bonds Payable carries a normal __________ balance, and Premium on Bonds Payable carries a normal __________ balance. a.credit; debit b.debit; credit c.positive; negative d.negative; positive

b

If a company has amortized a premium on bonds payable, under the indirect method for the statement of cash flows, the company __________ the premium from net income in the __________ section. a.adds; operating b.subtracts; operating c.subtracts; financing d.adds; financing

b

Jackson Company purchased back 1,000 shares of $2 common stock for $20. Jackson then resold the stock for $25. The amount credited to Additional Paid-in Capital from Treasury Stock is a.$20,000. b.$5,000. c.$10,000. d.$2,000.

b

On April 1, 2019, Vaughn Company issues $300,000 of 5-year bonds dated January 1, 2019, at par. The bonds have a contract (stated) interest rate of 10% and pay interest semiannually on January 1 and July 1. How much interest has accrued as of April 3? a.$30,000 b.$7,500 c.$3,000 d.$15,000

b

ROE (return on equity) is defined as a.Average Shareholders' Equity ÷ Net Income. b.Net Income ÷ Average Shareholders' Equity. c.Profitability × Efficiency × Net Income. d.Net Income - Shareholders' Equity.

b

On January 1, Year 1, Tec Corporation grants share appreciation rights to its CEO. Under the plan, the CEO will receive cash for the difference between the quoted market price and a $40 option price for 2,000 shares of the company's common stock on the exercise date. The service period is 4 years. The fair value per SAR is $18 at the end of Year 1 and $20 at the end of Year 2. The compensation expense for Year 2 would be a.$30,000. b.$11,000. c.$39,000. d.$9,000.

b (18 x 2000 x 1/4 = 9000; year 2; 20 x 2000 x 2/4 = 20,000 - 9000 = 11,000)

Bluebell Corporation has outstanding convertible bonds with a face value of $9,000. It has just paid interest on these bonds, and the bonds have a book value of $9,500. Each $1,000 bond is convertible into 30 shares of common stock (par value $20 per share). All of the bonds are converted into common stock when the market value of Bluebell's common stock is $25 per share. Under the book value method, what value would be given to additional paid-in capital from bond conversion? a.$3,600 b.$4,100 c.$5,400 d.$1,350

b (9000/1000 x 30 x 20 = 5,400; 9500-5400)

The document that defines the rights of the bondholders is the a.bond debenture. b.bond indenture. c.bond certificate. d.deep discount bond. Feedback Area

bond indenture

Martin Company has 40,000 authorized shares and 20,000 shares issued and outstanding of $6 par common stock. Martin declares a 2-for-1 stock split and a reduction in par value to $3 per share. How many shares are issued and outstanding after the split? a.80,000 b.20,000 c.40,000 d.60,000

c (20,000 issued shares x 2)

Brighton Company has a carrying value of a note payable of $10,000 at the beginning of the year of $8,763.45 with an effective interest rate of 11%. What is the entry for recording the interest expense and discount amortization? a. Discount on Notes Payable 1,100 Interest Expense 1,100 b. Interest Expense 1,100 Discount on Notes Payable 1,100 c. Interest Expense 963.98 Discount on Notes Payable 963.98 d. Discount on Notes Payable 963.98 Interest Expense 963.98

c (8763.45 * 11%)

Imogen Corporation has 2,000 shares of 9%, $50 par cumulative preferred stock. The total annual dividend owed to the shareholders is a.$180. b.$4.50. c.$9,000. d.$10,000.

c (9% x 50 x 2000 = 9000)

The issuing company has the ability to recall and repay a debt issue prior to maturity by using a a.conversion provision. b.call provision. c.debenture provision. d.restructure provision.

call provision

Discount on Bonds Payable is a(n) a.valuation account. b.contra account. c.accumulation account. d.adjunct account.

contra account

Which of the following is not a factor of the selling price of a bond? a.General bond market conditions b.Contract rate set by buyer c.Relative risk of the bonds d.Expected state of the economy Feedback Area

contract rate set by buyer

Grey Corporation issues 800 shares of its no-par common stock for $15 per share. When Grey records the sale of stock, it will a.credit Common Stock. b.credit Additional Paid-in Capital. c.debit Additional Paid-in Capital. d.debit Common Stock.

credit common stock

Red Corporation retired bonds at maturity. The journal entry would include a a.credit to Bonds Payable. b.debit to Cash. c.credit to Cash. d.credit to Interest Expense. Feedback Area

credit to cash

The journal entry to record the issue of bonds between the interest payment dates would include a a.credit to Cash. b.debit to Bonds Payable. c.debit to Interest Expense. d.credit to Interest Expense.

credit to interest expense

When common stock is issued at an amount greater than par value, the difference between the par value and the proceeds from the sale is recorded by a.crediting Retained Earnings. b.debiting Additional Paid-in Capital. c.debiting Common Stock. d.crediting Additional Paid-in Capital.

crediting additional paid in capital

Dividends in arrears pertain to a.callable preferred stock. b.convertible preferred stock. c.cumulative preferred stock. d.participating preferred stock

cumulative preferred stock

Which of the following does not influence the rate of interest needed to issue debt? a.Debt/equity relationship b.Inflation c.Expectations of current and future earnings d.Current earnings per share

current earnings per share

Bonds sold at a discount have a.Yield < Contract Rate and Interest Expense > Interest Paid. b.Yield < Contract Rate and Interest Expense < Interest Paid. c.Yield > Contract Rate and Interest Expense < Interest Paid. d.Yield > Contract Rate and Interest Expense > Interest Paid.

d

On May 1, Widdle Corporation issued 10,000 shares of its $10 par common stock to Saddles for a tract of land. The stock had a fair market value of $15 per share on this date. According to Saddles' last property tax record, the land was valued at $82,000. What amount should Widdle record as an increase in paid-in capital? a.$32,000 b.$18,000 c.$82,000 d.$50,000

d (10,000 x 15-10 = 50,000)

On January 1 of the current year, Paisley Company issues a 4-year, non-interest-bearing note with a face value of $7,000 and receives $4,852 in exchange. The PV factor that would be used to find the implicit interest rate is a.0.3069. b.0.4427. c.1.4427. d.0.6931.

d (4852/7000)

Java Company issued a 5-year, $100,000 bond for $91,700 at an 8% stated rate on January 1, 2019. Interest is paid semiannually on January 1 and July 1. Any discount is amortized using the straight-line method every time interest is paid. The amount of the discount amortization per period of Java's bond is a.$8,300. b.$1,660. c.$4,150. d.$830.

d (8,300 / 10)

Which of the following is the best reason for issuing long-term liabilities? a.Debt financing offers an income tax advantage because interest expense reduces taxable income. b.Debt financing typically has a higher cost of capital than equity. c.Debt financing carries voting rights. d.Equity financing may be the only available source of funds.

debt financing offers an income tax advantage because interest expense reduces taxable income

Which of the following is not a reason for issuing long-term liabilities? a.Debt financing typically has a higher cost of capital than equity. b.Debt financing may be the only available source of funds. c.Debt financing offers an income tax advantage because interest expense reduces taxable income. d.Debt financing provides the opportunity for financial leverage.

debt financing typically has a higher cost of capital than equity

Under the effective interest method, periodic interest expense is computed by multiplying the a.effective interest rate by the book value of the bonds. b.discount paid by the book value of the bonds. c.effective interest rate by the cost of the bonds. d.premium paid by the book value of the bonds.

effective interest rate by the book value of the bonds

The market rate at which the bonds are actually sold is the a.maturity rate. b.effective rate. c.par rate. d.time rate.

effective rate

When a company offers bondholders a "sweetener" to induce them to convert their bonds to common stock, the cost of this bond conversion is reflected in the a.Common Stock account of the balance sheet. b.expense section of income from continuing operations. c.extraordinary items section of the income statement. d.operating revenue section of the income statement.

expense section of income from continuing operations

Blue Company borrows cash and issues a long-term note payable bearing a stated and fair interest rate. Initially, the company records the note at a.the future value. b.the discounted cash flow value. c.market value. d.face value.

face value

A corporation that operates in Texas but is incorporated in Nevada is viewed as a a.foreign corporation in Nevada. b.public corporation in Nevada. c.public corporation in Texas. d.foreign corporation in Texas.

foreign corporation in Texas

An estimated interest rate based on the rate that an independent borrower and an independent lender would negotiate for a similar transaction under comparable conditions and terms is a (n) a.present value interest rate. b.future value interest rate. c.effective interest rate. d.imputed interest rate.

imputed interest rate

Capper Company has not declared or paid dividends on its cumulative preferred stock in the last 2 years. The dividends in arrears should be reported a.as a reduction in paid-in capital. b.in a note to the financial statements. c.as a long-term liability. d.as a current liability.

in a note to the financial statements

Under the cost method of accounting for treasury stock transactions, when the proceeds from a sale are greater than the cost, the excess over cost is treated as a(n) a.increase in Additional Paid-in Capital from Treasury Stock. b.increase in Additional Paid-in Capital on Common Stock. c.increase in a contra-shareholders' equity account. d.increase in Other Expenses from Treasury Stock Sales.

increase in additional paid in capital from treasury stock

Under IFRS, how are interest payments disclosed in relation to notes payable? a.Interest is either an operating or a financing activity in the cash flow statement. b.Interest is only disclosed in the financing section of the cash flow statement. c.Interest payment is disclosed in the operating section of the cash flow statement. d.Interest is only disclosed in the investing section of the cash flow statement.

interest is either an operating or a financing activity in the cash flow statement

Which of the following statements concerning treasury stock is true? a.It retains the preemptive right. b.It receives dividend distributions. c.It participates in stock splits. d.It carries voting rights.

it participates in stock splits

When bonds are sold at a premium, interest expense is a.less than the interest paid. b.greater than the interest paid. c.equal to the interest paid. d.equal one period to the interest paid and higher the next period to the interest paid.

less than the interest paid

A company investing borrowed funds expects to earn a return greater than the interest it will pay for the use of funds is using a.equity. b.leverage. c.the income tax advantage. d.deferred liabilities.

leverage

When the conversion of bonds payable to common stock is recorded under the market value method and the market value of the common stock exceeds the book value of the bonds at the date of conversion, the difference is recorded as a debit to a.Loss on Conversion. b.Retained Earnings. c.Additional Paid-in Capital—Common Stock. d.Discount on Bonds Payable.

loss on conversion

When bonds are sold at a premium, the yield is __________ the contract rate. a.higher than b.lower than c.equal to d.greater than

lower than

A preemptive right is the right to a.share in the profits when a dividend is declared. b.share in the distribution of the assets of a corporation should it be liquidated. c.maintain a proportionate interest in the ownership of a corporation by purchasing a proportionate share of additional capital stock should such stock be issued. d.vote in the election of directors and to establish corporate policies.

maintain a proportionate interest in the ownership of a corporation by purchasing a proportionate share of additional capital stock should such stock be issued

Which of the following may not be included in the Contributed Capital section? a.Market value of stock b.Stock warrants c.Par value of common stock d.Par value of preferred stock

market value of stock

A stock split has what effect on shareholders' equity and paid-in capital? a.Decrease and increase b.No effect and no effect c.Decrease and decrease d.No effect and increase

no effect and no effect

If a plan is __________, the corporation makes a memorandum entry indicating the number of additional shares that may be acquired. a.invalid b.compensatory c.nonexpired d.noncompensatory

noncompensatory

A noncompensatory stock option plan is designed to a.reduce employee ownership of the corporate stock. b.obtain more widespread employee ownership or raise additional capital for the firm. c.raise additional capital for the firm. d.provide additional compensation to key officers and employees within the corporation.

obtain more widespread employee ownership or raise additional capital for the firm

Which of the following is not a reason to call a bond? a.Offset any unfavorable changes in the market b.Eliminate any restrictions on operations in the bond contract c.Repay debt to reduce level of debt d.Take advantage of favorable changes in the market

offset any unfavorable changes in the market

For a stock appreciation rights (SARs) compensation plan, the measurement date is the date a.when the employees may first exercise the options. b.of the adoption of the plan. c.on which the options are exercised. d.on which the options are granted to the employees.

on which the options are exercised

Which of the following is not a characteristic of the corporate form of business entity? a.Owners have unlimited liability. b.Ownership is easily transferred. c.It is able to raise large amounts of capital. d.It is a separate legal entity.

owners have unlimited liability

One of the three criteria that must be met for a share purchase plan to be noncompensatory is that the discount from the market price does not exceed the a.difference between the fair value and the market value of the stock. b.fair value of stock not issued to the public. c.market value of stock not issued to the public. d.per-share amount of stock issuance costs avoided.

per share amount of stock issuance costs avoided

The book value (or carrying value) of the bond issue at any time is its face value a.minus any unamortized premium or plus any unamortized discount. b.plus any unamortized premium or minus any unamortized discount. c.plus any unamortized discount. d.minus any unamortized premium.

plus any unamortized premium or minus any unamortized discount

When a long-term, non-interest bearing note is exchanged solely for cash, the note is assumed to have a a.present value equal to the cash proceeds. b.future value equal to the cash proceeds. c.present value greater than the cash proceeds. d.future value less than the cash proceeds.

present value equal to the cash proceeds

Modification of terms of a debt includes which of the following? a.Debtor records a portion of each cash payment as interest expense and records the remainder as a reduction in the carrying value of the liability b.Transfer of receivables from the debtor to the creditor c.Debtor recognizes annual interest expense using the effective interest method d.Reduction of the face amount or maturity amount of the debt

reduction of the face amount or maturity amount of the debt

Modification of terms of a debt includes which of the following? a.Transfer of receivables from the debtor to the creditor b.Reduction of the face amount or maturity amount of the debt c.Debtor recognizes annual interest expense using the effective interest method d.Debtor records a portion of each cash payment as interest expense and records the remainder as a reduction in the carrying value of the liability

reduction of the face amount or maturity amount of the debt

Under the straight-line method of amortization, the amount of interest expense a.is based on remaining book value. b.remains constant. c.decreases over time. d.increases over time.

remains constant

A material gain or loss resulting from the retirement of bonds before their maturity date is recognized by a.making a prior period adjustment. b.amortizing it over the remaining natural life of the bond. c.reporting it as an extraordinary item in the year of retirement. d.reporting it as income from continuing operations in the year of retirement.

reporting it as income from continuing operations in the year of retirement

All of the following would appear in the Contributed Capital section of shareholders' equity on the balance sheet except a.retained earnings. b.preferred stock characteristics. c.dividends in arrears. d.the preferred stock dividend rate.

retained earnings

Companies that issue bonds must take all of the following steps except a.make a public announcement of their intent to sell the bonds. b.set the contract rate and the maturity date. c.set the effective rate (or yield) that best reflects the current market conditions. d.receive approval from regulatory authorities.

set the effective rate (or yield) that best reflects the current market conditions

__________ give holders the option to purchase a specified number of common shares at a predetermined price for a period of time. a.Stock warrants b.Convertible bonds c.Expired warrants d.Conversions

stock warrants

Investors may agree to purchase capital stock from a corporation and pay at a later date. This creates a legally binding contract known as a.outstanding capital stock. b.contracted capital stock. c.treasury stock. d.subscribed capital stock.

subscribed capital stock

After a troubled debt restructuring, which of the following does not have to be disclosed by the debtor? a.The aggregate loss on debt restructuring b.A description of the major features of the restructuring agreement c.Aggregate gain or loss on the transfer of assets d.Certain per share information.

the aggregate loss on debt restructuring

Which of the following is not a consideration when determining the rate of interest charged on long-term notes payable? a.The amount of long-term debt of the borrower b.The credit risk of the lender c.The amount of current debt of the borrower d.The credit risk of the borrower

the credit risk of the lender

Under GAAP, a liability is derecognized for financial purposes if which of the following occurs? a.The debtor defaults and the creditor must derecognize the liability. b.The debtor pays the creditor and is relieved of its obligation for the liability. c.The debtor is released legally from being the secondary obligor under the liability. d.The creditor changes the terms of the liability and must derecognize the original liability.

the debtor pays the creditor and is relieved of its obligation for the liability

A stock option plan will be defined as compensatory if it has which of the following characteristics? a.Employees have 31 days or less from the date the purchase price is set to decide whether or not to enroll in the plan. b.The purchase price is based solely on the market price of the stock on the purchase date. c.Almost all full-time employees are able to participate in the plan. d.The discount from market price for the stock option is greater than either what would be reasonable in an offer of stock to shareholders or others or the per-share amount of issuance costs avoided by not issuing the stock to the public.

the discount from market price for the stock option is greater than either what would be reasonable in an offer of stock to shareholders or others or the per share amount of issuance costs avoided by not issuing the stock to the public

When preparing a bond interest schedule for bonds sold at a premium using the effective interest method, a.the effective interest expense decreases with each successive payment. b.the cash payment will increase. c.the amortization of the bond discount decreases with each successive payment. d.the book value of the bonds increases with each successive payment.

the effective interest expense decreases with each successive payment

When a bond is sold between interest dates, a.the buyer must pay interest only for the period of time the bonds are outstanding b.the issuing company must pay the full interest amount attributable to the bond terms. c.selling a bond in between interest dates is not possible. d.the issuing company must pay interest only for the period of time the bonds are outstanding.

the issuing company must pay interest only for the period of time the bonds are outstanding

A company must disclose the various characteristics of its long-term debt. Normally, this disclosure will be in a.a letter to stockholders. b.the notes to the financial statements. c.the auditor's report. d.the endnotes of the annual report.

the notes to the financial statements

In accounting for guarantees, current GAAP requires companies a.to recognize a liability equal to the profit on a sale for which it guarantees another company's debt. b.to secure a guarantee for all debt issued when a company does not have sufficient cash to pay for a purchase on its own. c.to recognize a liability for the fair value of a guarantee. d.to recognize a liability for the present value of a guarantee and to reduce the profit it recognizes on the sale. Feedback Area

to recognize a liability for the fair value of a guarantee

Which of the following is not a reason for a corporation to acquire treasury stock? a.To use for share options, bonuses, and employee purchase plans b.To be used in the acquisition of other companies c.To reduce the earnings per share d.To reduce the likelihood of being acquired by another company

to reduce the earnings per share

A troubled debt restructuring will not include a.modification of terms of a debt. b.transfer of real estate from the creditor to the debtor. c.transfer of receivables or other assets from the debtor to the creditor. d.issuance of an equity interest to the creditor.

transfer of real estate from the creditor to the debtor

Which of the following is not a characteristic of treasury stock? a.Treasury stock does not ordinarily participate in dividends. b.Treasury stock has no preemptive rights. c.Treasury stock has no rights at liquidation. d.Treasury stock may increase retained earnings.

treasury stock may increase retained earnings

__________ occurs when a creditor, for economic or legal reasons related to a debtor's financial difficulties, grants a concession to the debtor that it would not otherwise consider. a.Forgiveness of debt b.Troubled debt restructuring c.Foreclosure d.Bankruptcy

troubled debt restructuring

One main difference between the book value method and the market value method for recording the conversion of bonds is that a.under the book value method no gain or loss is recorded upon conversion. b.under the book value method only a gain is recorded. c.under the market value method common stock and paid-in capital are recorded at stated value. d.under the market value method any loss is reported as a reduction in liabilities.

under the book method no gain or loss is recorded upon conversion

Contributed capital is __________ into the par value of the outstanding capital stock and the additional paid-in capital arising from the different transactions. a.always combined b.usually combined c.usually separated d.never separated

usually separated