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Discussion 1: WARRANTS WITH BONDS AND CONVERTIBLE BONDS

Part a: Describe the differences that exist in current accounting for original proceeds of the issuance of convertible bonds and of debt instruments with separate warrants to purchase common stock.

Do you think that separate warrants are a common thing or that we rarely see them?

Do you think these journal entries should be booked when they happen or should they be done as part of the adjusting entries at the end of the year?

Discussion 2: ETHICAL ISSUES-COMPENSATION PLAN

a) What, if any, is the ethical dilemma for Devers?

b) Should Devers's knowledge of the compensation plan be a factor that influences her estimate?

c) How should Devers respond to Adkins's request?

Many times we see companies with executive compensation plans tied to profits in some way. Do you think this should be actually passed as something not allowed in the business world to prevent any manipulation possibilities? Why or why not?

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