$.$ Four years after issue, debentures with a face value of $$1,000,000$ and book value of $$960,000$ are tendered for conversion into $80,000$ shares of common stock immediately after an interest payment date. At that time, the market price of the debentures is $104,$ and the common stock is selling at $$14$ per share $($par value $$10).$ The company records the conversion as follows.

$$

Bonds Payable$1,000,000$

Discount on Bonds Payable$40,000$

Common Stock$800,000$

Paid$-$in Capital in Excess of Par$$Common Stock$160,000$

Discuss the propriety of this accounting treatment.