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Study Resources (Accounting)

13.1   Learning Objective 1 1) Which statement about "equity" is not correct? A) Equity is the ownership interest in the company. B) Equity is the residual interest in the company. C) It is not necessary to provide information about the equity. D) Equity is the difference between assets and liabilities. 2) What does "priority" mean? A) Higher.
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14.1   Learning Objective 1 1) Which of the following is correct about financial instruments? A) Accounting for financial instruments has been consistent. B) There is no economic substance to financial instruments. C) They are often designed to circumvent accounting standards. D) All financial instruments are accounted for at fair value. 2) Which statement is correct about.
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18) Which is an example of "contributed capital"? A) Retained earnings. B) Preferred shares. C) Other comprehensive income. D) Accumulated other comprehensive income. 19) Which is an example of "contributed capital"? A) Appropriated reserves. B) Unappropriated retained earnings. C) Common shares. D) Accumulated other comprehensive income. 20) In which account would "transactions with owners" be reported? A) Appropriated reserves. B) Unappropriated retained.
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14.3   Learning Objective 3 1) Which method is used under IFRS to account for compound instruments? A) Fair value method. B) Proportional method. C) Incremental method. D) Zero common equity method. 2) Which statement best describes the "zero common equity method"? A) Under this method of accounting, for a convertible bond, all of the bond value would.
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4) Here is an extract of a trial balance for Lipika Inc. Indicate which accounts would be reported under the "retained earnings" section of the balance sheet. Investment in common shares of XPedious Corp              104,560 Preferred shares135,000 Treasury shares10,000 Other comprehensive income45,000 Accumulated other comprehensive income67,500 Bonds payable101,400 Unappropriated retained earnings90,000 Provision for doubtful accounts35,500 Appropriated retained earnings8,500 5) Here.
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23) Really Amazing Vacations Ltd. issues $1,000,000 of ten-year, 10% bonds dated January 1,2012. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the $1,048,801 sales price less the $80,000 fee charged by Really Amazing's investment bank. Really Amazing's year-end is.
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14) The following is an extract from the balance sheet as at December 31, 1011: Preferred shares, $10 per share non-cumulative dividend, redeemable$525,000 at $15 per share, 250,000 authorized, 25,000 issued and outstanding Common stock, 60,000,000 authorized, 6,000,000 issued and outstanding              6,019,233 Contributed surplus—preferred shares from repurchase and resales150,000 Retained earnings9,281,092 The company did not declare.
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13.4   Learning Objective 4 1) When does a company record dividends payable? A) On date of record. B) On ex-dividend date. C) On payment date. D) On declaration date. 2) What is the "ex-dividend" date for the Toronto Stock Exchange? A) 2 business days after the declaration date. B) 2 business days after the date of record. C) 2.
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12) Who uses information about "equity" and what information about equity is useful to financial statement users? 13) Explain the meaning of "contributed capital" and "common share." What distinguishes a common share from a preferred share? 14) Explain the meaning of "par value," "contributed surplus," and "preferred shares." .
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13.2   Learning Objective 2 1) What kind of transaction is "appropriated reserves"? A) An example of "contributed surplus." B) An example of a transaction with owners. C) An example of a "contributed capital." D) An example of a transaction with non-owners. 2) What kind of transaction is "appropriated reserves"? A) An example of "par value" preferred shares. B).
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12) The following is an extract from the balance sheet as at December 31, 1011: Preferred shares, $4 per share non-cumulative dividend, redeemable $125,000 at $6 per share, 250,000 authorized, 25,000 issued and outstanding Common stock, 60,000,000 authorized, 6,000,000 issued and outstanding              6,019,233 Contributed surplus—preferred shares from repurchase and resales50,000 Retained earnings     9,281,092 Total shareholders' equity$15,475,325 The.
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22) Which statement best describes the "proportional method"? A) Under this method of accounting, for a convertible bond, all of the bond value would be counted as a liability. B) Under this method of accounting, for a convertible bond, the issuing entity would record a liability for the estimated value of the.
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8) Great-West Lifeco Inc. announced the following share issuances:   March 1, 2008 10,000,000 2% non-cumulative five-year rate reset first preferred shares (series J) for par value of $12 each. After five years the dividend rate will be reset to the five-year Canada bond rate plus 3.35%. Dividends are payable as declared by.
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8) Below are details relating to balances for the equity accounts of Cauvet Company, and changes to those balances. Note that AOCI is accumulated other comprehensive income. Balance or changesAmount ($000's) Common stock, 2011, Jan 170,000 Unappropriated retained earnings, 2011, Jan 1139,000 Appropriated retained earnings for sinking fund reserve, 2011, Jan 1              3,200 AOCI from.
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15) There are three independent situations summarized below. In all three cases the bonds are sold on January 1, 2011 and the issuing company has a December 31 year-end. In situation three, the bonds were all repurchased at par on January 1, 2015. Situation 1Situation 2Situation 3 Face value30,000,00015,000,00030,000,000 Coupon rate12%12%12% Coupon dates6/30; 12/3112/3112/31 Market.
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5) McMillan Manufacturing issued 60,000 stock options to its employees. The company granted the stock options at-the-money, when the share price was $40. These options have no vesting conditions. By year-end, the share price had increased to $42. McMillan's management estimates the value of these options at the grant date.
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14.2   Learning Objective 2 1) How should warrants on the company's own common shares be accounted for? A) Fair value. B) Fair value through profit or loss. C) Amortized cost. D) Historical cost. 2) How are derivative contracts generally accounted for? A) Fair value. B) Fair value through profit or loss. C) Amortized cost. D) Historical cost. 3) Assume that Ariel.
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10) A company issued 105,000 preferred shares and received proceeds of $7,000,000. These shares have a par value of $50 per share and pay cumulative dividends of 6%. Buyers of the preferred shares also received a detachable warrant with each share purchased. Each warrant gives the holder the right to.
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12.5   Learning Objective 5 1) Which standard does not need to be considered when considering the disclosure and presentation of non-current liabilities? A) IAS 1, Presentation of Financial Statements B) IAS 36, Impairment C) IFRS 7, Financial Instruments: Disclosures D) IAS 39, Financial Instruments: Recognition and Measurement 2) Sarah Braun is the owner of Sarah's Shameless.
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13) How should employee stock options be accounted for? A) Historical cost. B) Fair value through profit or loss. C) Amortized cost. D) Fair value. 14) Which is a derivative on the company's own common shares? A) Interest rate swap contract. B) Foreign exchange forward contract. C) Employee stock option. D) Commodity futures contract. 15) Which is a derivative on.
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6) Here is an extract of a trial balance for Masterious Ltd. Indicate which are examples of transactions with non-owners. Investment in common shares of XPedious Corp              104,560 Preferred shares135,000 Common shares100,000 Treasury shares10,000 Contributed surplus—preferred shares5,000 Other comprehensive income45,000 Accumulated other comprehensive income67,500 Bonds payable101,400 Unappropriated retained earnings90,000 Provision for doubtful accounts35,500 Appropriated retained earnings8,500 7) Here is an extract of.
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12) A company issued 100,000 preferred shares and received proceeds of $5,750,000. These shares have a par value of $50 per share and pay cumulative dividends of 6%. Buyers of the preferred shares also received a detachable warrant with each share purchased. Each warrant gives the holder the right to.
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6) Mountip Inc. was incorporated under provincial legislation with a December 31 year-end. The company has a single class of shares. As at December 31, 2011, it had 150,000 shares issued and outstanding. These shares had a book value of $5,700,000 on the balance sheet. During 2012, Mountip repurchased 5%.
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13.3   Learning Objective 3 1) What is the significance of "par value" for accounting purposes? A) The par value determines the amount of contributed surplus. B) Par value has no economic significance for accounting purposes. C) Par values determines the amount of cash received from investors. D) Par value shares are not permitted under IFRS.
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6) A company issues convertible bonds with face value of $10,000,000 and receives proceeds of $10,500,000. Each $1,000 bond can be converted, at the option of the holder, into 800 common shares. The underwriter estimated the market value of the bonds alone, excluding the conversion rights, to be approximately $8,300,000. Requirement: Record.
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12.4   Learning Objective 4 1) When can a non-current liability not be derecognized? A) When the company discharges the obligation or it expires. B) When the company pays the debt and continues to be liable for the liability. C) When the underlying debt contract is canceled. D) When the creditor provides the services specified in.
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15) A company had a debt-to-equity ratio of 1.55 before issuing convertible bonds. This ratio included $500,000 in equity. The company issued convertible bonds. The value reported for the bonds on the balance sheet is $180,000 and the conversion rights are valued at $22,000. Requirement: After the issuance of the convertible bonds,.
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14) Fredericton Aerospace Inc. raised $5,369,210 by selling $5,000,000 of six-year, 12% bonds dated January 1, 2013. Fredericton used part of the proceeds to pay its investment bank's fee of $100,000 and related legal and accounting fees of $600,000. Interest is payable on June 30 and December 31 each year. Fredericton.
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10) Below are details relating to balances for the equity accounts of Isha Company, and changes to those balances. Note that AOCI is accumulated other comprehensive income. Balance or changes                       Amount ($000's) Common stock, 2011, Jan 150,000 Unappropriated retained earnings, 2011, Jan 139,000 Appropriated retained earnings for sinking fund reserve, 2011, Jan 1              3,200 AOCI from.
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14.4   Learning Objective 4 1) Which method must be used under IFRS to account for employee stock options? A) Intrinsic value of options. B) Time value of options. C) Market value of the shares. D) Fair value of the options. 2) Which statement is correct about the accounting for employee stock options? A) The expense is recorded.
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17) In the table below, choose the financial instrument that best explains the example on the right side. Types of financial instrument to select from: Financial asset, financial liability, equity, compound instrument, basic option, swap, forward, future, warrant, put option, or call option. 18) Explain how bonds issued with warrants alleviate.
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8) Which transaction would not affect retained earnings? Issue preferred shares1,500,500 Issue common shares2,300,000 Declare dividends on common shares100,500 Stock split400,000 Skipping dividend payment on preferred shares200,000 9) When shares are repurchased at an amount different from their original issue price, then held in treasury or cancelled, will the journal entry affect the following components? Share capital Contributed.
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16) Which statement about contributed surplus is correct? A) Contributed surplus can only arise from the issuance of shares. B) Contributed surplus can arise from the issuance of stock options. C) Contributed surplus arising from share repurchase gives rise to a debit journal entry. D) Contributed surplus arising from share issuance gives rise to.
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10) Explain what an "in-substance defeasance" is and whether this arrangement results in the derecognition of a financial liability. 11) Missouri Wheels Ltd. (MW) sold $9,000,000 of fourteen-year, 3% bonds at par on January 1, 2012. Interest is payable on June 30 and December 31 each year. The bonds can be.
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