INTERMEDIATE ACCT. (CHAP 20-21)

Question 1

When shares with par value are sold, the excess of the proceeds over the par value is credited to

a. Share capital
b. Share premium
c. Retained earnings
d. Gain on issuance of shares

Answer 1

B

Question 2

When shares without par value are sold, the excess proceeds over stated value shall be credited to

a. Income
b. Retained earnings
c. Share premium
d. Share capital

Answer 2

C

Question 3

If shares are issued for a noncash consideration, the shares issued shall be measured by

a. Fair value of the shares
b. Par value of the shares
c. Fair value of the noncash consideration
d. Carrying amount of the noncash consideration

Answer 3

C

Question 4

If shares are issued to extinguish a financial liability, what is the initial measurement of the shares issued?

a. Par value of the shares
b. Fair value of the shares
c. Fair value of liability extinguished
d. Book value of the shares

Answer 4

B

Question 5

When shares are issued in payment for services, what is the least appropriate basis for recording the transaction?

a. Fair value of the services
b. Par value of the shares
c. Fair value of the shares
d. Any of these provides an appropriate basis for recording the transaction

Answer 5

B