liquidity

USGAAP, APB 14: if the warrants are detachable, you would allocate the equity proportion at issue.
If the warrants are nondetachable, as indicated in this case, you are not allowed to allocate the equity proportion until exercised.
Upon exercised, I understand you have two options:
fair market value of the options = 2417= 7
relative market value of the option at issued= 5
I see that they choose the second option and deduct 5* 2000 warrants from the book value of the bond, thus the transaction looks like (assuming that the bondholders pay cash to exercise)
Cash 17*20 = 34 000
Bond discount 10 000
Common stock 20 000
CIP 24 000
Thus B and C are thus wrong, even in the if you credit the bond discount with market value of the bond
Any CPA around to confirm this.