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Alte Inc. issues $5 million face amount convertible bonds; the bonds issue at 101. Similar...

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Accounting

Alte Inc. issues $5 million face amount convertible bonds; the bonds issue at 101. Similar bonds issued without the conversion right would have been issued at 99. Alte applies U.S. GAAP.

At time of issuance, Alte should recognize the difference between the issue price and the face amount of the bonds as:

Multiple Choice

a gain.

a premium on bonds payable.

a discount on bonds payable.

paid-in capital.

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