Note: There is no separate account for the conversion feature
Accounting at conversion--two methods. Assume conversion is initiated by the HOLDER.
- Market value approach: Use market value of bonds or shares of stock whichever is clearer.
- Assume B/P carrying value is $80,000; redeemed when market value is $82,000 and when the shares carry a market value of $85,000.
- Assume market value of bonds is clearer: