Question 1

Which statement best describes the accounting when a company cancels its own shares at an amount higher than the average share value?

Accepted Answer

A) Contributed surplus and retained earnings will be credited. 
B) Contributed surplus and retained earnings will be debited. 
C) Contributed surplus will be credited, thereby increasing equity. 
D) Contributed surplus will be debited, thereby decreasing equity. 
A) Contributed surplus and retained earnings will be credited. 
B) Contributed surplus and retained earnings will be debited. 
C) Contributed surplus will be credited, thereby increasing equity. 
D) Contributed surplus will be debited, thereby decreasing equity.

Question 2

Assume that a company issued 10,000 shares for $30/share. What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Accepted Answer

A) Debit to common shares for $28,000. 
B) Debit to common shares for $30,000. 
C) Credit to contributed surplus for $29,000. 
D) Credit to contributed surplus for $1,000. 
A) Debit to common shares for $28,000. 
B) Debit to common shares for $30,000. 
C) Credit to contributed surplus for $29,000. 
D) Credit to contributed surplus for $1,000.

Question 3

Explain why accounting does not recognize gains on share repurchase transactions.

Accepted Answer

A commonly given reason for why accounti

Question 4

Contrast the different treatment between IFRS and ASPE with respect to property dividends.

Accepted Answer

IFRIC 17 states that the property should

Question 5

What kind of transaction is "appropriated reserves"?

Accepted Answer

A) An example of preferred shares. 
B) An example of a transaction with owners. 
C) An example of "retained earnings." 
D) An example of a"other comprehensive income." 
A) An example of preferred shares. 
B) An example of a transaction with owners. 
C) An example of "retained earnings." 
D) An example of a"other comprehensive income."

Question 6

Which of the following statements is correct?

Accepted Answer

A) Investors favor purchasing preferred shares. 
B) All outstanding shares are eligible to vote for the board of directors. 
C) The value of preferred shares can be higher or lower than that of common shares. 
D) Common shares always have voting rights. 
A) Investors favor purchasing preferred shares. 
B) All outstanding shares are eligible to vote for the board of directors. 
C) The value of preferred shares can be higher or lower than that of common shares. 
D) Common shares always have voting rights.

Question 7

What is the "ex-dividend" date for the Toronto Stock Exchange?

Accepted Answer

A) 2 business days after the declaration date. 
B) 2 business days after the date of record. 
C) 2 business days before the date of record. 
D) 2 business days before the declaration date. 
A) 2 business days after the declaration date. 
B) 2 business days after the date of record. 
C) 2 business days before the date of record. 
D) 2 business days before the declaration date.

Question 8

What is the economic significance of "par value" for accounting purposes?

Accepted Answer

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 or ASPE. 
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 or ASPE.

Question 9

Which is an example of "contributed capital"?

Accepted Answer

A) Appropriated reserves. 
B) Unappropriated retained earnings. 
C) Common shares. 
D) Accumulated other comprehensive income. 
A) Appropriated reserves. 
B) Unappropriated retained earnings. 
C) Common shares. 
D) Accumulated other comprehensive income.

Question 10

List and explain four reasons why a company might repurchase its own shares.

Accepted Answer

Companies repurchasing shares:
1. offer

Question 11

Which statement is correct concerning property dividends?

Accepted Answer

A) Issuing property dividends is a common method of distributing value to the shareholders. 
B) A property dividend could be used to transfer assets from a subsidiary to a parent company. 
C) Property dividends cannot be used by a parent company to distribute shares of an associate or subsidiary to its shareholders. 
D) The historical value of the property is used for purposes of recording the value of the dividend. 
A) Issuing property dividends is a common method of distributing value to the shareholders. 
B) A property dividend could be used to transfer assets from a subsidiary to a parent company. 
C) Property dividends cannot be used by a parent company to distribute shares of an associate or subsidiary to its shareholders. 
D) The historical value of the property is used for purposes of recording the value of the dividend.

Question 12

Dunst Company had the following shareholders' equity account balances on December 31, 2020: $\begin{array}{lr}
\text { Common stock, } 150,000 \text { authorized, } 40,000 \text { issued } & \$ 880,000 \
\text { Contributed surplus on repurchases and resales } & 45,000 \
\text { Treasury shares, } 20,000 \text { shares } & (800,000) \
\text { Retained earnings } & 500,000 \
\text { Total shareholder's equity } & \$ 625,000
\end{array}$ During 2021, the following transactions occurred:
i. May 1: Dunst resold 1,600 of the treasury shares at $52 per share.
ii. Dec. 30: The board of directors declared cash dividends of $2 per share.
iii. Dec. 31: Net income for the year ended December 31, 2021 was $150,000.
Dunst uses the single transaction method for treasury shares.
Required:
a. Record the journal entries for the transactions in 2021 and make all the necessary year-end entries relating to shareholders' equity accounts.
b. Prepare the presentation of the shareholders' equity section of Dunst's balance sheet as at December 31, 2021.

Accepted Answer

The answer of Dunst Company had the following shareholders' equity...

Question 13

Which statement best describes the accounting when a company cancels its own shares at an amount greater than their par value?

Accepted Answer

A) Retained earnings will be debited at an amount equal to the par value of the shares. 
B) Retained earnings will be credited at an amount equal to the par value of the shares. 
C) Contributed surplus will be debited at an amount equal to the par value of the shares. 
D) Share capital will be debited at an amount equal to the par value of the shares. 
A) Retained earnings will be debited at an amount equal to the par value of the shares. 
B) Retained earnings will be credited at an amount equal to the par value of the shares. 
C) Contributed surplus will be debited at an amount equal to the par value of the shares. 
D) Share capital will be debited at an amount equal to the par value of the shares.

Question 14

When is a corporation legally obligated (liable)to pay dividends?

Accepted Answer

A corporation is leg

Question 15

If 10,000 shares with par value of $15/share are issued for $20/share, how much will be presented as "contributed surplus" for financial statement purposes?

Accepted Answer

A) $10,000 
B) $50,000 
C) $150,000 
D) $200,000 
A) $10,000 
B) $50,000 
C) $150,000 
D) $200,000

Question 16

What kind of transaction is "appropriated reserves"?

Accepted Answer

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. 
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.

Question 17

Which statement is correct?

Accepted Answer

A) Equity holders are concerned more about the debt accounts in the financial statements. 
B) Equity holders are concerned about the debt and equity accounts in the financial statements. 
C) Debt holders are concerned about the debt and equity accounts in the financial statements. 
D) Debt holders are concerned more about the equity accounts in the financial statements. 
A) Equity holders are concerned more about the debt accounts in the financial statements. 
B) Equity holders are concerned about the debt and equity accounts in the financial statements. 
C) Debt holders are concerned about the debt and equity accounts in the financial statements. 
D) Debt holders are concerned more about the equity accounts in the financial statements.

Question 18

Which is an example of "contributed capital"?

Accepted Answer

A) Retained earnings. 
B) Preferred shares. 
C) Other comprehensive income. 
D) Accumulated other comprehensive income. 
A) Retained earnings. 
B) Preferred shares. 
C) Other comprehensive income. 
D) Accumulated other comprehensive income.

Question 19

If 700 preferred shares with a benchmark value of $35/share, a dividend rate of 5% and redeemable for $50/share, are sold for $45/share how much dividend may the preferred equity holders expect to receive?

Accepted Answer

A) $525 
B) $1,225 
C) $1,575 
D) $1,750 
A) $525 
B) $1,225 
C) $1,575 
D) $1,750

Question 20

Burlington Corp. has a single class of shares. As its year ended December 31, 2020, the company had 5,000,000 shares issued and outstanding. On the stock exchange, these shares were trading at around $7. In the company's accounts, these shares had a value of $50,000,000. The equity accounts also show $650,000 of contributed surplus from previous repurchases of shares.
On January 15, 2021, Burlington repurchased and cancelled 250,000 shares at a cost of $7 per share. Later in the year, on August 20, the company repurchased and cancelled a further 475,000 shares at a cost of $14 per share.
Required:
Record the journal entries for the two share transactions in 2021.

Accepted Answer

Note that the common shares ha

Which statement best describes the accounting when a company cancels its own shares at an amount higher than the average share value?

Assume that a company issued 10,000 shares for $30/share. What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Explain why accounting does not recognize gains on share repurchase transactions.

Contrast the different treatment between IFRS and ASPE with respect to property dividends.

What kind of transaction is "appropriated reserves"?

Which of the following statements is correct?

What is the "ex-dividend" date for the Toronto Stock Exchange?

What is the economic significance of "par value" for accounting purposes?

Which is an example of "contributed capital"?

List and explain four reasons why a company might repurchase its own shares.

Which statement is correct concerning property dividends?

Which statement best describes the accounting when a company cancels its own shares at an amount greater than their par value?

When is a corporation legally obligated (liable)to pay dividends?

If 10,000 shares with par value of $15/share are issued for $20/share, how much will be presented as "contributed surplus" for financial statement purposes?

What kind of transaction is "appropriated reserves"?

Which statement is correct?

Which is an example of "contributed capital"?

If 700 preferred shares with a benchmark value of $35/share, a dividend rate of 5% and redeemable for $50/share, are sold for $45/share how much dividend may the preferred equity holders expect to receive?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Complex Financial Instruments

Earnings Per Share

Pensions and Other Employee Future Benefits

Accounting for Leases

Accounting for Income Taxes

Accounting Changes

Statement of Cash Flows

Filters

Exam 3: Equities

Which statement best describes the accounting when a company cancels its own shares at an amount higher than the average share value?

Assume that a company issued 10,000 shares for $30/share. What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Explain why accounting does not recognize gains on share repurchase transactions.

Contrast the different treatment between IFRS and ASPE with respect to property dividends.

What kind of transaction is "appropriated reserves"?

Which of the following statements is correct?

What is the "ex-dividend" date for the Toronto Stock Exchange?

What is the economic significance of "par value" for accounting purposes?

Which is an example of "contributed capital"?

List and explain four reasons why a company might repurchase its own shares.

Which statement is correct concerning property dividends?

Which statement best describes the accounting when a company cancels its own shares at an amount greater than their par value?

When is a corporation legally obligated (liable)to pay dividends?

If 10,000 shares with par value of $15/share are issued for $20/share, how much will be presented as "contributed surplus" for financial statement purposes?

What kind of transaction is "appropriated reserves"?

Which statement is correct?

Which is an example of "contributed capital"?

If 700 preferred shares with a benchmark value of $35/share, a dividend rate of 5% and redeemable for $50/share, are sold for $45/share how much dividend may the preferred equity holders expect to receive?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Complex Financial Instruments

Earnings Per Share

Pensions and Other Employee Future Benefits

Accounting for Leases

Accounting for Income Taxes

Accounting Changes

Statement of Cash Flows

Filters