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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
15. Cash Flow Statement Disclosure You have been hired as a staff accountant by a small company that recently completed an initial public offering (IPO) of its common stock. At its inception, the company had been A?¬nanced by Pegasus, an investment group. Pegasus had bought a signiA?¬cant amount of the companyAc€?cs debt (equal to a third of its total assets) in the form of convertible bonds. The stock price has appreciated signiA?¬cantly since the IPO, and Pegasus has decided to convert its debt securities into equity, giving Pegasus a 28% stake in the company. Your CEO, Dane Hathaway, argues that this conversion should not be reported on the cash A?¬‚ow statement. Ac€?oAc€?oIt didnAc€?ct involve any cash either way, and itAc€?cs not like the structure of our business has changed. We havenAc€?ct increased or changed our A?¬xed assets, and we havenAc€?ct given anything up.Ac€?cAc€?c Research the appropriate CodiA?¬cation and draft a memo to Dane explaining whether his reasoning is correct and citing your references.
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