If Convertible Preferred Shares Are Converted into Common Shares

Multiple Choice

If convertible preferred shares are converted into common shares,

A) a gain on conversion must be recorded if the legal capital of the preferred shares is greater than the legal capital of the common shares.
B) a loss on conversion must be recorded if the legal capital of the preferred shares is less than the legal capital of the common shares.
C) a gain or loss on conversion is not recorded.
D) the fair value of the preferred shares on the date of conversion is credited to the Common Shares account.