FIND "XXX"

3. Conversion: recorded using the book value approach. Under this approach, the book value of bonds payable is removed from the accounts and is replaced by the common stock issued, No gain or loss is recognized Example 2. Moore Corporation has outstanding 2,000, $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2017, when the unamortized discount is $30,000 and the market price of the stock is $21 per share. Prepare the entry to record the conversion of the bonds Dr. Bonds Payable $2,000,000 Cr. Discount on Bonds Payable Cr. Common Stock (2,000 x 50 x $10) Cr. Paid-in Capital in Excess of Par-Common $30,000 1,000,000 970,000 Note: Additional consideration ("sweetener") given to induce conversion should be recognized as an expense of the current period. Dr. Debt Conversion Expense XXX (sweetener amount) Cr. Cash