stock

Question 1

what do you need to record the compensation expense for stock options,

Answer 1

need to determine the fair value of the options, and then record the expense ratably over the vesting period.

Question 2

Retained earnings formula?

Answer 2

Income to date - dividend declared to date

Question 3

what is the journal entry of a large stock dividend(more than 25%)

Answer 3

Debit Retained Earning for the Par value

Credit Common Stock for the Pa Value

Question 4

When do you use equity method and what is the formula

Answer 4

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

Question 5

a mandatory redeemable financial instrument, must be classified as a liability unless the redemption is required to occur only at?

Answer 5

upon the liquidation or termination of the reporting entity.

Question 6

is issuing stock dividend subject to the weighted average method?

Answer 6

no, eg. declaring a 5% stock dividend on 7/1 would be accounted as outstanding stock x 1.05

Question 7

how would treasury stock acquired affect outstanding stocks?

Answer 7

common share purchased as treasury stock would decrease the total amount of common stock outstanding.

Question 8

do treasury stock transactions result in gain or loss?

Answer 8

no, treasury stock transactions are equity transactions, only affect additional paid in capital and retained earnings, no gains or loss.

Question 9

preferred value of stocks

Answer 9

Preferred value = Par + Premiums + Dividends in arrears

Question 10

An entity with preferred stock that has a preference in involuntary liquidation “considerably” in excess of par shall:

Answer 10

disclose the liquidation preference in the equity section of the statement of financial position.

Question 11

The common stock dividend

Answer 11

shares require “retroactive” treatment. They are assumed to be outstanding throughout all periods presented.

Question 12

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?

Answer 12

Carlton’s income statement will have to be revised to include the earnings per share data.

Question 13

Gains on sales of treasury stock not previously accounted for as constructively retired should be credited to ?

Answer 13

additional paid in capital

Question 14

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.

Answer 14

8/15/X1 Treasury stock 10,000 -
Additional paid-in capital 1,000 -
Retained earnings 1,000 -
Cash - 12,000

Question 15

Which of the following should be reported as a stockholders’ equity contra account?

Answer 15

Cumulative foreign exchange translation loss

Question 16

Securities of a subsidiary that are convertible into parent company’s stock shall be considered:

Answer 16

potential common shares of the parent for consolidated diluted EPS

Question 17

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?

Answer 17

The organization reports the change in unrestricted net assets for the period.

Question 18

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?

Answer 18

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.

Question 19

An entity is required to disclose:

Answer 19

reconciliation, effect of preferred dividends, and antidiluted securities.

Question 20

what do you do when a large stock dividend happen? (more than 25% of the current outstanding stock?

Answer 20

retained earnings is debited for the par value, and common stock is credit for the par value.

Question 21

Cost method vs par vale

Answer 21

Cost=cost of to repurchase the treasury stock.

Par value: par value of common stock originally issued.

Question 22

Liquidating dividend

Answer 22

Cash dividend - Retained eanings

Question 23

stock dividends and splits are treated retrospectivelly

Answer 23

earliest time possible, jan 1 not weighted

Question 24

does planned and approved sale of a segment

Answer 24

discontinued operations, a component of an entity is a segment, reporting unit or asset group ( not a part of a line of business).

Question 25

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?

Answer 25

Declaration and distribution of stock dividend