Ch15 Exercises-1 1. 2. 3. 4. 5. 6. The conversion of bonds is most commonly recorded by the a. incremental method. b. proportional method. C d. Corporations issue convertible debt for two main reasons. One is the desire to raise equity capital that, The other a. the ease with which convertible debt is sold even if the company has a poor credit rating. market value method. book value method. b that equity capital has issue costs that convertible debt does not. c. that many corporations can obtain debt financing at lower rates. that convertible bonds will always sell at a premium. The conversion of preferred stock into common stock requires that any excess of the par value of the common shares issued over the carrying amount of the preferred being converted should be a. reflected currently in income. b. reflected currently in income as a discontinued operations item. C. treated as a prior period adjustment. d treated as a direct reduction of retained earnings. Stock warrants outstanding should be classified as