Methods To Determine Value Assigned To Bonds Issued

Question

1. Lang Co. issued bonds with detachable common stock warrants. Only the warrants had a known market value. Based on what method should the company determine the value assigned to bonds issued?

a. Face value method

b. Proportional method

c. Fair value method.

d. Incremental method.

2. What effect will the acquisition of treasury stock have on stockholders' equity and
earnings per share, respectively?

a. Decrease and no effect –

b. Increase and no effect

c. Decrease and increase

d. Increase and decrease

Summary

The question belongs to Accounting and it discusses about the methods a company determines to value assigned to bonds issued and the effect of acquisition of treasury stock to have on stockholders’ equity and earnings per share.

Total Word Count 2