- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 25. Non-Current (Long-term) Liabilities
- Subject 5. Presentation and Disclosure of Long-Term Debt
CFA Practice Question
According to GAAP, a separate value must be assigned to the equity feature included with the following debt securities:
II. bonds issued with warrants
I. convertible bonds
II. bonds issued with warrants
A. Neither of these bonds
B. I and II
C. II only
Explanation: When convertible bonds are sold, all of the proceeds are assigned to the liability. When bonds with warrants are sold, a portion of the proceeds is assigned to equity.
User Contributed Comments 2
| User | Comment |
|---|---|
| CoffeeGirl | convertible bond. all proceed is treat as liability. bond with warrant, a portion is assigned to equity. |
| nmech1984 | learnt and forgot |