How should the bonds be reported


You Decide: Should the following bonds be classified as debt or equity on the balance sheet?

Response to the following problem:

A company has recently issued bonds that are convertible into stock at the bondholder's request. The interest rate on the bonds is ridiculously low because it is expected that most holders will exercise the conversion options! How should the bonds be reported?

 

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Financial Accounting: How should the bonds be reported
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