FAR 7 Flashcards
When a cash dividend is declared, RE is decreased by the amount of the dividend on the date of:
Declaration
If a corporation sells some of its Treasury stock at a price that exceeds its cost, the excess should be
credited to APIC
There is no gain or loss on the purchase or sale of treasury stock. Any difference goes to APIC, and if the loss cant absorb it it would be debited to RE.
What is the primary purpose of a quasi-reorganization?
it is to eliminate a RE deficit so that future earnings will be available for dividends rather than the limited to offsetting the RE deficit.
How do you calculate a liquidating dividend?
Total cash dividends - Retained Earnings
When are the proceeds in excess of stocks par value credited to APIC?
at the time the rights are exercised
How should a property dividend be recorded in RE?
At the property’s market value at the date of declaration
What amount should be assigned to warrants outstanding?
the fair value of the warrants is credited to APIC
When are stock option plans for which the grant and exercise dates are different be reduced?
at the exercise date
How do you handle treasury stock?
net income or RE will never be increased through treasury stock transactions.
What is the formula for book value per common share?
common stockholders equity/common shares outstanding
CS outstanding= Issued shares - TS
When are equity instruments issued for employee services are to be valued when?
at the date of grant
How do you calculate your compensation cost?
Market price of the share on date of grant x number of restricted shares awarded
what would common stock that contains an unconditional redemption feature be considered?
a liability at the date of issuance on the issuers books.
When are contingent shares included in EPS calculation?
they are included in EPS as of the date the conditions have been satisfied.
for WASCO what midyear event would have to be treated as if it occurred at the beginning of the year?
the declaration and distribution of stock dividends.
