F7-Equity Flashcards
When is retained earnings impacted from treasury stock transactions?
- When using the cost method and the re-acquisition cost was greater APIC-Treasury Stock (the re-issuance). The loss is booked to R/E.
2.
When is retained earnings debited for dividends paid?
On the date of declaration ( a payable is also booked )
When treasury stock is sold for more than cost where is the difference credited to?
It is credited to APIC for a “gain”, if there is a LOSS then it is debited to APIC,but if the loss is greater than APIC then the rest is debited to R/E
What is the purpose of a quasi-reorg?
To restore a deficit in R/E to be able to pay dividends
What are liquidating dividends and how do they impact equity?
They are dividends that exceed R/E (NOT CASH, those are scrip dividends), and are debited to APIC, then C/S if needed.
How to compute book values per common stock?
Common stock holder’s equity(less: treasury stock)/common shares outstanding
When are equity instruments issued for employee services measured at FV?
At the date of the grant
How is compensation expense reported for stock options when the person fails to exercise them?
Compensation is still expensed over the service period and credited to APIC whether or not the options are exercised.
How is stockholder’s equity affected by a donation of the corporation’s shares?
It is not impacted because it didn’t cost the co to acquire the shares back.
The JE would:
DR-Donated Treasury stock @ FV
CR- APIC @ FV
What amt is assigned to warrants outstanding (detachable stock warrants with preferred warrants)
the FV is credited to APIC
What amount of dividends are subtracted from net income for EPS calculations?
The dividends declared on noncumulative stock (whether paid or not) and the dividends accumulated for cumulative stock (whether declared or not)
What supplemental disclosures are required when using the indirect method for the stmt of cash flows?
The cash paid for net interest payments and income taxes
What is the difference between IFRS and GAAP for reporting of interest and dividends received on the cash flow stmt?
GAAP only in operating changes, IFRS- either operating or financing
