Question

Describe the accounting for the issuance, conversion, and retirement of convertible securities?

Answer 1

Convertible securities (bonds) premium or discount gets amortisied from its issue date,assuming bond will be held until its maturity.At time of its conversion to other securities (stock),an amount is calculated as per "Generally Accepted accounting principles" to record converted security at its book value.

Retirement of convertible securities is a stage when cash is paid to the holder of securities and the difference between the carrying value of retired security and cash payment is a gain or loss for company