Module 1 Flashcards
How to compute diluted earnings per share?
- Net income plus the convertible bonds net of tax. Please remember to check the dates (numerator)
- Denominator =
convertible bonds to common stock
Convertible preferred stock to common stock
Beg. Balance of common stock. This is average
What is the effect of unrecognized prior service cost of pension to the comprehensive income?
Is an item of comprehensive income and decreases the comprehensive income
Large accelerated filer are required to file form 10k with the SEC on? And also for accelerated and non accelerated
60 days after year end of the fiscal yr. 700million up
75 days after year end for accelerated
90 for non accelerated
What to use to interim financial statements of the current yr?
Generally accepted accounting principles that are use in the most recent annual report unless a change un accounting principle is adopted in the current yr
How do you book foreign currency gain or loss?
Gain or loss should begin the computation from the start of transaction to account the gain or loss.
How to compute and distribute the dividends payment?
- See if there’s a dividends in arrears for preferred stocks
- Compute the the current preferred dividend
- Payment should go to preferred stocks and the remainder money if any should be paid to common stocks
When is dividends a liability of the company?
When the company declared dividends. If not declare you should only disclose the dividends share.
What is the result of the sale of the treasury stock less than cost?
Increase in stockholder’s equity.
How to compute additional paid in capital for treasury under par
- Compute treasury price at the original issuance
- Additional paid in capital is computed by the original price of the stock minus the price of the issuance of the new stock
- Any leftover will be recorded to Retained earnings.
How do you account for property distributed and how the Retained Earnings affected by this distribution?
Property dividends is valued at their fair value at the time of declaration. And a deduction to Retained Earnings
What is the affect of Retained earnings when property dividend of marketable securities was declared, after all nominal account
- You value it if there is a gain or loss. The carrying value - fair value @ the time of declaration
- With this gain or loss you will subtract the fair value of the marketable security.
What is the effect in the asset, stockholders equity and Retained Earnings if the company paid dividends?
Asset - no effect
Retained earnings - decrease
Stockholders Equity - no effect because of the Retained earnings is under stockholders equity.
How do you value stock dividends declare?
- Compute if it is a small stock dividends ( less than 20% to 25%) use the market value upon declaration. If it is silent use the par value
- Make sure you add the value of this stock to your common stock and deduct this amount to Retained Earnings.
Tell me how you compute the treasury stock thru cost method ?
Treasury stock is computed to the resale value. And you will use APIC T/S if applicable.
Tell me how to compute treasury stock thru par value
Treasury stock always use the original value. APIC C/S is use. Do not use APIC T/S
How do you compute the value of prior yr error in depreciation that you need to record in Retained earning?
- Analysts what is the effect of the error of depreciation on your prior income statement if its over or under.
- Make sure to deduct or the amount is net of tax
What is the effect of issued right without consideration on common stock and APIC?
There will be no entry or no effect on common stock and APIC because there is no consideration. Only when the right is issued and exercise, then both common and APIC will increase.
Is contingent share included in computing diluted eps?
Yes it is included.
How do you record a property dividend (like merchandise) the excess of merchandise carrying amount over it’s market value?
A loss is recognized, this result in a reduction in income from operation.
Usual and frequent how do you record this in your financial statement?
It should be record in income statement into the continuing operation. Without disclosure
For the purpose of computing basic earnings per share on a dividends on noncumulative preferred stock that have been declared but not paid and cumulative preferred stock not declared on
Income available to common shareholders is determined by deducting dividends declared on noncumulative preferred stock (regardless of whether they have been paid) and dividends accumulated in the period on cumulative preferred stock (regardless of whether declare)
Is cumulative preferred stock a liability to the issuer on the date of issuance?
No cumulative preferred stock is considered a equity and would not be recorded on issuer’s book as a liability
The balance in accumulated other comprehensive income will change how?
The account will increase on the other comprehensive income only.
