The conversion of preferred stock

1) The conversion of preferred stock may be recorded by the

A. market value method
B. method
C. book value method
D. incremental method

2) The conversion of preferred stock into that any excess of the par value of the over the carrying amount of the preferred being converted should be

A. treated as a prior period adjustment
B. treated as a direct reduction of retained earnings
C. reflected currently in income as an extraordinary item
D. reflected currently in income, but NOT as an extraordinary item