[wjxhahaha]

Check this question please:

Which of the following statements characterizes convertible debt under U.S. GAAP?

c.

No value is assigned to the conversion feature when convertible debt is issued.

Choice “c” is correct. Under U.S. GAAP, because the conversion feature cannot be sold or transferred separate from the bonds themselves, no value is assigned to the conversion feature when the bonds are issued.

I thought this is wrong because of the detachable warrant……..

[JohnWayneIsGod]

Convertible debt is not a detachable warrant. Think of it like this: Convertible debt is something that transforms into something else. The Debt goes away, and is replaced by something else, such as a stock.

A detachable warrant is a different animal. In the case of debt with a detachable warrant, the debt and the conversion feature are separate.

FAR - 80

Courage is being scared to death, but saddling up anyway.

-John Wayne

[Anonymous]

A detachable warrant can be turned in for cash or something else…a convertible bond converts to stock if so chooses to do so.

[Author]

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