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Ex. 15-127—Shareholders’ Equity. Indicate the effect of each of the following transactions on total shareholders' equity by placing an "X" in the appropriate column. Increase Decrease No Effect 1. Declaration of a cash dividend. ________ ________ ________ 2. Operating loss for the period. ________ ________ ________ 3. Retirement of bonds at more than carrying value..
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16. When valuing financial instruments at fair value (the fair value option), a. Private entity GAAP allows this option only for certain financial instruments. b. IFRS allows this for all financial instruments. c. IFRS requires that this option be used only where fair value results in more relevant information. d. this is only allowed.
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Ex. 15-128—Share subscriptions. On April 28, 2012, Schooner Inc. accepted subscriptions for 20,000 of its no par value common shares. At this time, the shares were selling for $45 each. A 40% down payment was received with the remainder due in six months. On October 28, 2012 the balance of the.
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Use the following information for questions 81 through 83. Timmins Corp. has outstanding 20,000 no par value, $0.80, preferred shares and 100,000 no par value common shares. Dividends have been paid every year except last year and the current year. The carrying value of the preferred shares is $200,000 and of.
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Pr. 14-76—Accounting for a troubled debt settlement. Kane Ltd., who owes Patrick Corp. $300,000 in notes payable, is in financial difficulty. To eliminate the debt, Patrick agrees to accept from Kane land having a fair value of $227,500 and a recorded cost of $170,000. Instructions (a) Calculate the amount of gain or loss.
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Ex. 15-131—Reacquisition of shares. For numerous reasons, a corporation may reacquire its own shares. When a corporation does this, the CBCA requires that the purchased shares be cancelled. Instructions Explain how a corporation would account for each of the following: 1. Purchase of shares at a price less than the carrying value of the.
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Use the following information to answer questions 63 and 64. Lockness Corp. is authorized to issue 400,000 no par value common shares. Subscribers agree to purchase shares at $15 per share with a 30% down payment. 63. Assume that subscribers agree to purchase 100,000 shares and make the required down payment. The.
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PROBLEMS Pr. 14-72—Bond interest and discount amortization. On June 1, 2011, Bella Cooler Corp sold 10 year, $500,000 (face value) bonds for $438,800. The bonds have a stated interest rate of 8% and a yield rate of 10%, and pay interest annually on May 31 of each year. The bonds are to.
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26. Note disclosures for long-term debt generally include all of the following except a. assets pledged as security. b. names of specific creditors. c. restrictions imposed by creditors. d. call provisions and conversion privileges. 27. The times interest earned ratio is calculated by dividing a. net income by interest expense. b. income before taxes by interest expense. c..
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55. For a two-year period following a properly implemented financial reorganization, Grant Corporation operated profitably and paid dividends equal to 10% of its net income in each year. How could one determine that the financial reorganization had occurred? a. Could not unless comparative balance sheets were presented. b. From the shareholders’ equity.
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101. The shareholders' equity section of Arrow Corporation at December 31, 2011 was: During 2012, the following transactions occurred relating to shareholders' equity: 2,000 treasury shares were acquired at $28 per share. 2,000 more treasury shares were acquired at $35 per share. 1,200 treasury shares were sold at $30 per share. Arrow.
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Ex. 14-71—Accounting for troubled debt. (a) What are the general rules for measuring and recognizing gain or loss by the debtor on a settlement of troubled debt, which includes the transfer of noncash assets? (b) What are the general rules for measuring and recognizing a gain and for recording future payments by.
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Ex. 15-137—Dividends on preferred shares. In each of the following independent cases, it is assumed that the corporation has outstanding 20,000, $0.80, preferred shares, with a carrying value of $200,000, and 80,000 common shares, with a carrying value of $800,000. No dividends have been declared for 2010 or 2011. (a) At December.
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MULTIPLE CHOICE—CPA Adapted 107. Aye Corp was organized in January 2012 with authorized capital of 1,000,000 no par value common shares. On February 1, 2012, shares were issued at $10 per share. On March 1, 2012, the corporation's lawyer accepted 7,000 common shares with a fair value of $85,000 in settlement.
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46. Under IFRS, the Statement of Changes in Shareholders’ Equity must include a. share capital and retained earnings only. b. share capital and contributed surplus only. c. share capital, accumulated other comprehensive income, contributed surplus, and retained earnings. d. retained earnings, share capital, and accumulated other comprehensive income. 47. The payout ratio can be calculated.
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Pr. 14-74—Entries for bonds payable. Instructions Prepare the necessary journal entries to record the following transactions relating to the long-term issuance of bonds by Georgian Bay Corp. Show calculations and round to the nearest dollar. March 1 Issued $200,000 (face value) 8% bonds for $218,040, including accrued interest. Interest is payable semi-annually on December.
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Pr. 14-78—Bond accounting, ratios, debt covenants. Superior Equipment Corporation is a public company manufacturing high-precision equipment. On January 1, 2008, Superior issued a 12% $10,000,000 bond, maturing in ten years. The bond had a carrying value of $9,300,000 at January 1, 2011. Interest is payable semi-annually on June 30 and December 31..
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MULTIPLE CHOICE—Computational 59. London Corporation was organized on January 1, 2012, with 400,000 no par value common shares authorized. During 2012, the corporation had the following share transactions: Jan 5 Issued150,000 shares at $10 per share April 6 Issued50,000 shares at $12 per share June 8 Issued50,000 shares at $14 per share July 28 Purchased20,000.
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Ex. 15-129—Shares issued in noncash transactions. What are the different bases for share valuation when assets other than cash are received for issued shares?   Ex. 15-130—Reacquisition of shares. Alaska Corp. originally sold 1,000,000 of its no par common shares at $13 a share. Later, Alaska bought 6,000 shares of these shares at $17.
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EXERCISES Ex. 15-125—True or false questions. Indicate True or False by writing T or F in the space provided. ____ (a) Common Shares Subscribed is a shareholders' equity account. ____ (b) A stock split does not require a formal journal entry. ____ (c) Bad debt expense is recognized on defaulted subscriptions. ____ (d) The.
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86. Presented below is information reported by Watusi Ltd for their last two fiscal years: What is Watusi’s rate of return on common shareholders’ equity for 2012? a. 48.8% b. 26% c. 25% d. 22.4% Use the following information for questions 87 through 89. Additional information: On May 1, 2012, 6,000 common shares were issued. Although dividends had.
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Pr. 14-75—Entries for bonds payable. Instructions Prepare journal entries to record the following transactions relating to long-term bonds of Leonardo Inc. Show calculations and round to the nearest dollar. (a) On June 1, 2011, Leonardo Inc. issued $400,000, 6% bonds for $391,760, including accrued interest. The bonds were dated February 1, 2011, and.
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Ex. 15-126—Lump sum issuance of shares. Bertram Corp is authorized to issue 15,000 no par value common shares and 5,000 no par value preferred shares. On January 16, 2012, the corporation sold 50 common shares and 60 preferred shares for a lump sum of $9,000. The common were selling at $100.
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Pr. 14-73—Bond interest and discount amortization. Maggio Corporation issued $400,000 8% bonds on October 1, 2010, due on October 1, 2015. Interest is to be paid semi-annually on April 1 and October 1. The bonds were sold to yield 10% effective annual interest. Maggio Corporation has a calendar year end. Instructions (a) Complete.
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MULTIPLE CHOICE—Conceptual 1. Shareholders' equity is generally classified into two major categories: a. Contributed capital and donated capital. b. Contributed surplus and retained earnings. c. Retained earnings and Accumulated Other Comprehensive Income. d. Earned capital and contributed capital 2. The residual interest in a corporation belongs to the a. management. b. creditors. c. common shareholders. d. preferred shareholders. 3. Which statement.
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Ex. 14-68—Accounting for a troubled debt settlement. At December 31, 2012, Oscar Ltd owes Wilde Corp for a $300,000 note payable, plus accrued interest of $27,000. Oscar is now in financial difficulty and cannot repay Wilde. To settle the debt, Wilde agrees to accept from Oscar equipment with a fair value.
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Ex. 15-136—Dividends on preferred shares. Assume that all of the company's retained earnings are to be paid out in dividends on December 31, 2012 and that preferred dividends were last paid on December 31, 2010. Instructions If the preferred shares are cumulative and fully participating, how much should each class of shares receive?       .
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Pr. 14-77—Accounting for bond issuance and retirement. Part A Twilight Corp. desired to raise cash to fund its expansion by issuing long-term bonds. The corporation hired an investment banker to manage the issue (best efforts underwriting) and also hired the services of a lawyer, an audit firm, etc. On June 1, 2011,.
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Ex. 14-70—Accounting for a troubled debt restructuring. On December 31, 2010, Beckham is in financial difficulty and cannot pay a $700,000 note (with $70,000 accrued interest payable) to Victoria. Victoria agrees to forgive the accrued interest, extend the maturity date to December 31, 2012, and reduce the interest rate to 4%..
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6. The cumulative feature of preferred shares a. limits the amount of cumulative dividends to the par value of the preferred shares. b. requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders. c. means that the shareholder can accumulate.
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51. A “gain" on the sale of treasury shares should be credited to a. contributed surplus. b. the share capital account. c. retained earnings. d. other income. 52. Gupta Corp. purchased its own shares on January 1, 2012 for $20,000 and debited Treasury Shares for the purchase price. The shares were subsequently sold for $12,000..
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MULTIPLE CHOICE—Computational Use the following information for questions 31 through 33: On January 1, 2011, Schweb Co. issued eight-year 6% bonds with a face value of $500,000, with interest payable semi-annually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: 31. The present value of the.
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