This Year, the Bondholders of Brick, Inc

Multiple Choice

This year, the bondholders of Brick, Inc. exchanged convertible bonds for common stock. Brick's carrying amount of these bonds was less than the market value but greater than the par value of the common stock issued upon conversion. If Brick used the book value method of accounting for the conversion, which of the following occurred as a result of recording this conversion?

A) Stockholders' equity increased.
B) Additional paid-in capital decreased.
C) Retained earnings increased.
D) A loss was recognized.