book value method

Dictionary of Accounting Terms for: book value method
book value method

manner of accounting for a bond conversioninto stock. The entry is to debit bonds payable and premium on bonds payable (or credit discount on bonds payable) and credit common stock and premium on common stock. Note that the total credit is based on the bond’s book value. No gain or loss is recognized. Other entries may also be involved such as recording the interest payment prior to the bond conversion.

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