Area 2 Flashcards
interest capitalization
using the remaining months, just like outstanding common stock calculation for EPS, divide by 12, even though it close at Jun 30
capitalized software cost ?
you do the usual amortization, then compare the carry amount vs the net realizable value , pick lower of 2 , so the total expense = the depreciation + the loss write down ( let say carry amount at yr end is 45 vs NRV of 15)
a convertible debt securities has wut interest compared to nonconvertible debt ?
a convertible debt securities has lower interset than nonconvertible debt
allocation of detachable stock warrant , effect?
decrease premium and increase discount
apic of treasury stock
if it has not previously reissued TS, it has zero balance in APIC to offset the loss
when scrip dividend is declared?
When a scrip dividend is declared, retained earnings should be debited and scrip dividends (or notes) payable should be credited for the amount of the dividend ($100,000) excluding interest. Interest accrued on the scrip dividend is recorded as a debit to interest expense up to the balance sheet date with a corresponding credit for interest payable. Thus, interest expense will be debited and interest payable credited for $7,500 [$100,000 × 10% × (9 months ÷ 12 months)] on 10/31/Year 3.
a 30% stock dividend is declared, effect ?
no effect on total equity because a portion of RE is reclassified as contributed capital
capital lease lia at year 2, payment is made at year end Dec 31.
signed lease at dec 31 yr 1, 50 payment at Dec 31
was to be 10%, was $316,50
12% was $298,500.
Present value of NINE lease payments
at December 31, 20X1 (at implicit rate) $316,500
Less December 31, 20X1 payment 50,000
——–
Present value of lease obligation at beginning of 20X2 $266,500
Add 20X2 interest at 10% (.10 x 266,500) 26,650
——–
Lease obligation prior to 12/31/X2 payment $293,150
Less December 31, 20X2, payment 50,000
——–
Capital lease liability on 12/31/X2 balance sheet $243,150
