Choice "C" is correct. When the book value method is used to account for the conversion of bonds to stock, the stock issued is recorded at the carrying value of the bonds. In this problem, the bonds have a carrying value of $900,000 ($1,000,000 face value - $100,000 discount), so the 100,000 shares of stock will be recorded at $900,000, resulting in a $900,000 increase in stockholders' equity.
Choice "b" is incorrect. Under the book value method, the stock issued upon conversion of the bonds is recorded at the carrying value of the converted bonds, not at the amount of the bond discount.
Choice "d" is incorrect. Under the book value method, the stock issued upon conversion of the bonds is recorded at the carrying value of the converted bonds, not at the face amount of the bonds.
Choice "a" is incorrect. The market value of the stock is used to record the stock issued when bonds are converted to stock under the market value method, not under the book value method.