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How should debt be recorded when it includes an option for the holder to exchange the debt for common stock in the company? • The equity portion is valued at the par value of the stock, and the debt portion is valued at the remaining amount of the proceeds received. • The debt portion is valued at the value of the proceeds received (with a premium or discount, if applicable), and the equity portion is ignored until conversion. • The debt portion is valued at the present value of future cash payments, and the equity portion is valued at the remaining amount of the proceeds received. • The equity portion is valued at the value of the proceeds received (split into stock and paid-in capital), and the debt portion is ignored until conversion. • The equity portion is valued at the present value of future dividend payments, and the debt portion is valued at the preset value of future interest payments.
Sagot :
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