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On January 1,2020, Krona Incorporated issued a financial Instrument consisting of a $1,000,4% bond payable...

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Accounting

On January 1,2020, Krona Incorporated issued a financial Instrument consisting of a $1,000,4% bond payable and 100 shares of $1 par common stock. The yield for bonds of similar risk is 4%. The stock recenty traded at $40 per share.
a.
Assuming the individual values of the components are known, which they are, record the issuance of the combined security at a price of $4,800 using the proportional method.
b. Assuming only the fair value of the bond is known because the stock is thinly traded, record the sale of the combined security at a price of $4,700 using the incremental method.
c. Why would you prefer to use the incremental method in (a.) despite the fact that both security values are known? Which of the known values would you use?

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