34 Flashcards
deck 34
what is the accounting for stock rights?
*no JE til exercised
(memorandum entry only)
*exercise of rights:
Dr: cash (amt rec’d)
Cr: CS (par)
Cr: APIC (plug)
the SEC was created under which act?
the 1934 securities exchange act
what items are considered “retirement” of assets?
- sale of FA
- abandonment of FA
- recycling of FA
*not temporary idling of FA
what is the JE for dividends at date of declaration?
Dr: RE
Cr: D/P
what is the JE on date of record?
no JE
what is the JE on date of pmt for div’s?
Dr: D/P
Cr: cash
what is the JE for property div’s?
Dr: RE (FMV)
Dr: AD
Cr: cost of asset
Cr: gain (FMV - NBV)
*record as RE (FMV) on date of delcaration
what are scrip div’s?
no cash outflow yet b/c of cash shortage, so they issue a N/P
(includes int exp)
what are liquidating div’s?
div’s to SH > RE
*reduces APIC
JE:
Dr: RE (80%)
Dr: APIC (20% excess)
Cr: cash or D/P
what is the treatment of small and large stock div’s?
- small (<20-25%)
- reduce RE by FV
Dr: RE (FV)
Cr: CS (par)
Cr: APIC (plug)
.. NC on SE
- large (>20-25%)
- reduce RE by par
Dr: RE (par)
Cr: CS distributable
Dr: CS distributable
Cr: cap. stock
what is the statement of changes in SE?
provides “specific info” about changes in an entity’s primary equity comp’s
*has BB/EB SE, CI, div’s declared on CS
what is the reporting requirement for statement of changes in SE for GAAP and IFRS?
- GAAP = report either as primary FS or notes
* IFRS + SEC = must report as primary FS
what are the only methods that recognize revenue prior to sale?
*when production is the critical event and sales and cost of sales are reas. certain (commodities and % completion contract)
what is the JE for noncompensatory SO/purch plans?
no JE til employee buys stock
what are the req’s for a plan to be noncompensatory?
no comp exp
- subs. all full-timers meeting limited employee qualifications may participate
- stock is offered to eligible emp’s equally
- time permitted to exercise rights is limited to a reas. period
- any disc. from mkt price is no greater than would a reas. offer of stock to SH’s
- under IFRS, SO’s and stock purch plans are generally compensatory
what is the grant date and vesting period?
- grant date = date option is issued (no JE yet) and req’d meas. date for emp. svc’s
- vesting period = period of svc. needed from emp’s to earn right to exercise the options (grant –> vesting)
if grant and exercise dates are diff, when are SO’s o/s reduced?
at the exercise date
are comp. exp’s relative to SO’s recog’d regardless of whether the options are exercised?
yes, they are
what is the JE for comp exp at grant date?
Dr: comp exp
Cr: APIC-SO
what is the JE at the exercise date?
Dr: cash (SP)
Dr: APIC-SO (eliminate)
Cr: CS (par)
Cr: APIC (plug)
*EB APIC = cash + APIC elim - CS par
