When bonds payable are converted into common stock,the carrying value of the bonds is transferred to paid-in capital.

Question

Quizplus · Accepted Answer

When bonds payable are converted into common stock, the carrying value of the bonds (i.e., principal and any unamortized discount or premium) is transferred to paid-in capital as a part of the transaction. This results in an increase in stockholders' equity and a decrease in liabilities. Therefore, the statement "When bonds payable are converted into common stock, the carrying value of the bonds is transferred to paid-in capital" is true.

When Bonds Payable Are Converted into Common Stock,the Carrying Value