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Study Resources (Accounting)

8) A company issues convertible bonds with face value of $7,000,000 and receives proceeds of $8,500,000. Each $1,000 bond can be converted, at the option of the holder, into 100 common shares. The underwriter estimated the market value of the bonds alone, excluding the conversion rights, to be approximately $7,300,000. Required: Record.
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15.2   Learning Objective 2 1) Which statement is correct about basic EPS? A) It is an indicator of profitability that communicates ownership of earnings attributable to a company's dilutive shares. B) It is an indicator of profitability that communicates ownership of earnings attributable to a company's ordinary shares. C) It indicates the market price.
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21) 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. Type of financial instrument Example A company contracts with an.
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12) A company issued 105,000 preferred shares and received proceeds of $6,100,000. 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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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 on the grant date of the options. 2) What are the similarities and differences between forwards and futures? 3) List.
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19) List the five classes of transactions that explain the change in equity on the statement of changes in equity. 20) As of January 1, 2018, the equity section of LD Food Co.'s balance sheet contained the following: Common stock, 10 million authorized, 2 million issued and$3,000,000 outstanding Contributed surplus—from repurchase and cancellation of.
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13.3   Learning Objective 3 1) If a company issues 2,000 shares for $55 and then repurchases 50 shares at $50, how much is in the account "contributed surplus on retirement of shares'? A) $ 250 B) $ 2,750 C) $107,250 D) $110,000 2) If a company issues 2,000 shares for $55 and then repurchases 50 shares.
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15.1   Learning Objective 1 1) Which statement is correct about earnings per share (EPS)? A) A company's total earnings is more meaningful than its EPS. B) EPS represents the total amount of earnings of a company. C) EPS measures an ordinary share's interest in a company's earnings. D) The EPS is directly correlated with the.
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14.5   Learning Objective 5 1) What is a "hedge"? A) A financial instrument that is speculative and increases the risk for the company. B) An instrument that moves in the opposite direction to another financial asset or liability. C) An instrument that moves in the same direction as another financial asset or liability. D) A.
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30) For the year ended December 31, 2018, Jovial Productions Inc. earned $13,000,000. Outstanding preferred shares included $1,500,000 in 9% cumulative preferred shares issued on January 1, 2015 and 32,000 $160 non-cumulative preferred shares issued on January 1, 2017 that are each entitled to dividends of $7 per annum. Dividends.
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18) Which transaction would 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 19) 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 surplus Treasury.
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11) Explain why the IASB requires the disclosure of basic and diluted EPS. 12) Explain the difference between basic and diluted EPS. 13) Which of the following is correct about the difference between basic earnings per share (EPS) and diluted earnings per share? A) Basic EPS uses total common shares outstanding, whereas diluted.
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19) Which is a derivative on the company's own common shares? A) Accounts payable. B) Warrants on common shares. C) Commodity futures contract. D) Warranty provision. 20) Assume that MAK agrees to purchase US$500,000 for C$550,000 on January 15, 2018. The exchange rate at year end is US$1 = C$0.95 and the January 15, 2018.
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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 with changes recorded through income. C) Amortized cost. D) Historical cost. 3) Assume that.
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10) 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 changes ($000's) Common stock, 2019, Jan 1 70,000 Unappropriated R/E, 2019, Jan 1 139,000 Appropriated R/E for sinking fund reserve, 2019, Jan 1 3,200 AOCI from revaluations, 2019, Jan 1 1,900 Net.
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16) Ned Company reported the following information for its fiscal year: Net income $500,000 Preferred dividends 30,000 Common share dividends 20,000 Preferred shares are cumulative and carry an annual dividend of 10,000 The preferred dividends listed above include the current year and prior accumulated dividends. What is the amount of net income available to common shareholders? A) $440,000 B) $450,000 C) $470,000 D).
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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 may be used in support of innovations designed to circumvent accounting standards. D) All financial instruments are accounted for at fair value. 2).
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7) A company located in Canada spends $2,000 to purchase a foreign currency futures contract to buy US$100,000 at C$1.05:US$1.00. The contract matures 110 days later. Under which of the following circumstances could the company consider this future contract to be a fair value hedge for accounting purposes? 8) On December.
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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) Enterprises need to separate the components of a compound financial instrument and account for each component separately. (a) What are the three alterative methods.
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13) Elville Inc. was incorporated under provincial legislation with a December 31 year-end. The company has a single class of shares. As at December 31, 2016, it had 900,000 shares issued and outstanding. These shares had a book value of $18,000,000 on the balance sheet. During 2017, Elville repurchased 10% of.
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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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14) Which statement about "common shares" is correct? A) Common shares have the lowest claim to residual ownership interest of all shares. B) Common shares have the lowest priority of all shares issued by a company. C) Common shares have the highest priority of all shares issued by a company. D) Common shares have.
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21) The following is an extract from the balance sheet as at December 31, 2017: 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 outstanding6,019,233 Contributed surplus—preferred shares from repurchase and resales50,000 Retained earnings     9,281,092 Total shareholders' equity$15,475,325 The company.
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15) Here is an extract of a trial balance for Zoe and Zia Inc. Indicate which accounts would be under the "contributed capital" section of the balance sheet. Investment in common shares of XPedious Corp104,560 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.
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6) O'Neil Manufacturing issued 200,000 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. O'Neil's management estimates the value of these options at the grant date.
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13.6   Comprehensive Questions 1) BA Paint Ltd. was incorporated on January 1, 2019. The incorporation documents authorized an unlimited number of common shares and 200,000 preferred shares. During the following fiscal year, the company engaged in the following transactions relating to its equity: On January 1, the company issued 20,000 no par.
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26) Which statement about a "reverse stock split" is correct? A) The economic position of the investors is diluted after a stock split. B) The economic position of the investors is increased after a stock split. C) The economic position of the investors is decreased after a stock split. D) The economic position of.
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34) Accu Tech Renovations Corp. (ATRC) was incorporated on January 1, 2018. At that time it issued 100,000 ordinary shares; 80,000, $20, 3% preferred shares "A"; and 40,000, $20, 6% preferred shares "B." Net income for the year ended December 31, 2018 was $1,800,000. ATRC declares and pays total of.
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13.2   Learning Objective 2 1) Which statement is correct about "par value"? A) Par value refers to the price at which a common share is sold to the equity holders. B) The dividend rate can be specified as a percentage of the par value for common shares. C) The dividend rate can be specified.
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7) If 10,000 shares with par value of $15/share are issued for $20/share, how much will be presented as "contributed capital" for financial statement purposes? A) $10,000 B) $50,000 C) $150,000 D) $200,000 8) What is a "stock split"? A) It is an increase in the number of shares issued for which book value consideration is.
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42) Summer Surprise Ltd. (SSL) was incorporated on January 1, 2018. At that time, it issued 210,000 ordinary shares; 95,000, $65, 2% preferred shares "A"; and 85,000, $65, 4% preferred shares "B." Net income for the year ended December 31, 2018 was $500,000. SSL neither declares nor pays dividends during.
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26) For stock splits and stock dividends, while it is possible to state the number of shares as beginning-of-year equivalents, it makes more sense to use end-of-year equivalents because financial statement readers are evaluating EPS after the end of the year. Explain why the adjustment for stock splits and stock.
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13.5   Learning Objective 5 1) Below are details relating to balances for the equity accounts of Paras Company, and changes to those balances. Note that AOCI is accumulated other comprehensive income. Balance or changes Amount ($ 000's) Common stock, 2015, Jan 1 50,000 Unappropriated retained earnings, 2015, Jan 1 48,600 Appropriated retained earnings for sinking fund reserve, 2015,.
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16) 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. Required: After the issuance of the convertible bonds,.
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21) Which method is used under ASPE to account for compound instruments? A) Incremental method. B) Fair value method. C) Proportional method. D) Book value method. 22) Which statement best describes the "incremental method"? A) Under this method of accounting, for a convertible bond, all of the bond value would be counted as a liability. B) Under.
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9) In which account would "transactions with owners" be reported? A) Appropriated reserves. B) Unappropriated retained earnings. C) Contributed surplus. D) Accumulated other comprehensive income. 10) In which account would "transactions with non-owners" be reported? A) Appropriated reserves. B) Common shares. C) Contributed surplus. D) Par value of preferred shares. 11) What kind of transaction is "appropriated reserves"? A) An example.
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16) Great-West Lifeco Inc. announced the following share issuances:   March 1, 2013 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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