stock Flashcards
what do you need to record the compensation expense for stock options,
need to determine the fair value of the options, and then record the expense ratably over the vesting period.
Retained earnings formula?
Income to date - dividend declared to date
what is the journal entry of a large stock dividend(more than 25%)
Debit Retained Earning for the Par value
Credit Common Stock for the Pa Value
When do you use equity method and what is the formula
when you own more than 20% of a company, under equity method, net income increases the investment account, the dividend decreases .e. investment at the beginning of the year+20-15
a mandatory redeemable financial instrument, must be classified as a liability unless the redemption is required to occur only at?
upon the liquidation or termination of the reporting entity.
is issuing stock dividend subject to the weighted average method?
no, eg. declaring a 5% stock dividend on 7/1 would be accounted as outstanding stock x 1.05
how would treasury stock acquired affect outstanding stocks?
common share purchased as treasury stock would decrease the total amount of common stock outstanding.
do treasury stock transactions result in gain or loss?
no, treasury stock transactions are equity transactions, only affect additional paid in capital and retained earnings, no gains or loss.
preferred value of stocks
Preferred value = Par + Premiums + Dividends in arrears
An entity with preferred stock that has a preference in involuntary liquidation “considerably” in excess of par shall:
disclose the liquidation preference in the equity section of the statement of financial position.
The common stock dividend
shares require “retroactive” treatment. They are assumed to be outstanding throughout all periods presented.
The senior accountant for Carlton Co., a public company with a complex capital structure, has just finished preparing Carlton’s income statement for the current fiscal year. While reviewing the income statement, Carlton’s finance director noticed that the earnings per share data has been omitted. What changes will have to be made to Carlton’s income statement as a result of the omission of the earnings per share data?
Carlton’s income statement will have to be revised to include the earnings per share data.
Gains on sales of treasury stock not previously accounted for as constructively retired should be credited to ?
additional paid in capital
If the par value method is used to account for treasury stock, the purchase of the stock is considered as a withdrawal of a group of stockholders. The subsequent sale of the stock is regarded as an admission of a new group of stockholders.
8/15/X1 Treasury stock 10,000 -
Additional paid-in capital 1,000 -
Retained earnings 1,000 -
Cash - 12,000
Which of the following should be reported as a stockholders’ equity contra account?
Cumulative foreign exchange translation loss
Securities of a subsidiary that are convertible into parent company’s stock shall be considered:
potential common shares of the parent for consolidated diluted EPS
Forkin Manor, a nongovernmental not-for-profit, is interested in having its financial statements reformatted using terminology that is more readily associated with for-profit entities. The director believes that the term “operating profit” and the practice of segregating recurring and nonrecurring items more accurately depict the organization’s activities. Under what condition will Forkin be allowed to use “operating profit” and to segregate its recurring items from its nonrecurring items in its statement of activities?
The organization reports the change in unrestricted net assets for the period.
For the purpose of determining that no additional segments should be reported, the total of external revenues of all reportable segments must make up at least what percentage of total consolidated revenues?
the total of external revenues of all reportable segments must make up at least 75% of the total consolidated revenues or
an operating segment that previously met the criteria as a reportable segment, but does not meet those criteria in the current period, may still be treated as a reportable segment if management judges it to be of continuing significance.
An entity is required to disclose:
reconciliation, effect of preferred dividends, and antidiluted securities.
what do you do when a large stock dividend happen? (more than 25% of the current outstanding stock?
retained earnings is debited for the par value, and common stock is credit for the par value.
Cost method vs par vale
Cost=cost of to repurchase the treasury stock.
Par value: par value of common stock originally issued.
Liquidating dividend
Cash dividend - Retained eanings
stock dividends and splits are treated retrospectivelly
earliest time possible, jan 1 not weighted
does planned and approved sale of a segment
discontinued operations, a component of an entity is a segment, reporting unit or asset group ( not a part of a line of business).
In computing the weighted-average number of shares outstanding during the year, which of the following mid-year events must be treated as if it had occurred at the beginning of the year?
Declaration and distribution of stock dividend
