Question 1

Discuss the method of accounting for employee stock options.In your answer discuss the how the accounting has changed during recent years.

Accepted Answer

The FASB requires the fair value method

Question 2

FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except:

Accepted Answer

A)  The assets transferred have been isolated from the selling firm. 
B)  The buying firm obtains the right to pledge or exchange the transferred assets, and no condition both constrains the transferee from taking advantage of its right and provides more than a trivial benefit to the transferor. 
C)  The selling firm does not maintain effective control over the assets transferred through (a)an agreement that both entitles and obligates it to repurchase the assets or (b)the ability to unilaterally cause the transferee to return specific assets. 
D)  A creditor of the selling firm can access the receivables in the event of the seller's bankruptcy. 
A)  The assets transferred have been isolated from the selling firm. 
B)  The buying firm obtains the right to pledge or exchange the transferred assets, and no condition both constrains the transferee from taking advantage of its right and provides more than a trivial benefit to the transferor. 
C)  The selling firm does not maintain effective control over the assets transferred through (a)an agreement that both entitles and obligates it to repurchase the assets or (b)the ability to unilaterally cause the transferee to return specific assets. 
D)  A creditor of the selling firm can access the receivables in the event of the seller's bankruptcy.

Question 3

Following is the shareholders' equity section of Morgan Supplies on a day its common stock is trading at $77 per share.
   Required:
a.Use the financial statement template below to show the financial statement effects of
the following dividend events.(Assume that the events are independent.)
(1)Cash dividend declaration and payment of $1 per share
(2)Property dividend declaration and payment of shares representing a short-term
investment in Screen Products,Ltd.,with a fair value of $15,000
(3)10 percent stock dividend
(4)100 percent stock dividend
(5)3-for-1 stock split
(6)1-for-2 reverse stock split
   Journal entry (optional):
b.Which events changed the book value of common equity?
c.Under what conditions will these events lead to future increases and decreases in ROE?

Accepted Answer

(a)
 @#IMG-DLM& (b)Journal entries
(1)Retained Ear

Question 4

All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:

Accepted Answer

A)  The transaction or event that gave rise to the obligation has already occurred. 
B)  The firm has a present obligation and little or no discretion to avoid the transfer. 
C)  The firm must know the precise amount of the obligation before recording it. 
D)  The obligation involves a probable future sacrifice of economic benefits-a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares-at a specified or determinable date. The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation. 
A)  The transaction or event that gave rise to the obligation has already occurred. 
B)  The firm has a present obligation and little or no discretion to avoid the transfer. 
C)  The firm must know the precise amount of the obligation before recording it. 
D)  The obligation involves a probable future sacrifice of economic benefits-a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares-at a specified or determinable date. The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation.

Question 5

Which is the first date when employees can exercise their stock options?

Accepted Answer

A)  vesting date 
B)  grant date 
C)  exercise date 
D)  liquidating date 
A)  vesting date 
B)  grant date 
C)  exercise date 
D)  liquidating date

Question 6

Under U.S.GAAP,which of the following items would require a lessee to classify a lease of equipment as a capital lease?

Accepted Answer

A)  There is no transfer of ownership to the lessee at the end of the lease term. 
B)  The lease does not contain a bargain purchase option. 
C)  The lease term is 90% of the estimated economic life of the lease property. 
D)  The present value of the contractual minimum lease payments is 75% of the fair value of the leased property. 
A)  There is no transfer of ownership to the lessee at the end of the lease term. 
B)  The lease does not contain a bargain purchase option. 
C)  The lease term is 90% of the estimated economic life of the lease property. 
D)  The present value of the contractual minimum lease payments is 75% of the fair value of the leased property.

Question 7

Which of the following is the typical tradeoff when issuing preferred stock?

Accepted Answer

A)  The tradeoff between different accounting for an initial issuance of preferred stock as compared to a common stock issuance. 
B)  The tradeoff between maintaining corporate control and creating a class of shareholders with preference in all asset distributions. 
C)  The tradeoff of giving common shareholders priority over preferred shareholders in corporate liquidations. 
D)  The tradeoff of a convertibility feature of common shares into preferred shares. 
A)  The tradeoff between different accounting for an initial issuance of preferred stock as compared to a common stock issuance. 
B)  The tradeoff between maintaining corporate control and creating a class of shareholders with preference in all asset distributions. 
C)  The tradeoff of giving common shareholders priority over preferred shareholders in corporate liquidations. 
D)  The tradeoff of a convertibility feature of common shares into preferred shares.

Question 8

In the chart below,assign the directional effect (I = increase,D = decrease,or NE = no effect)of each of the following four transactions on the components of the book value of common shareholders' equity.
a.Recognition of compensation expense related to restricted stock.
b.Granting of stock appreciation rights to be settled with cash.
c.Recognition of compensation expense on stock appreciation rights.
d.Reacquisition and retirement of common stock at an amount greater than original issue price.

Accepted Answer

@#IMG-DLM& *Indicate

Question 9

Liabilities requiring the future delivery of goods or services appear on the balance sheet at the ______________________________ of those goods and services.

Accepted Answer

The answer of Liabilities requiring the future delivery of goods...

Question 10

Which kind of dividends typically pay dividends with additional shares of the corporation's stock?

Accepted Answer

A)  property dividend 
B)  stock dividend 
C)  liquidating dividend 
D)  scrip dividend 
A)  property dividend 
B)  stock dividend 
C)  liquidating dividend 
D)  scrip dividend

Question 11

Summarize how the following information about Crank Corp.'s restructuring would affect the balance sheet and income statement summary chart below.Crank Corp.'s restructuring will take approximately 18 months and was announced on March 15,2010:
(1)On March 15,2010 Crank Corp.announced its restructuring and recognized a restructuring charge of $845,000.
(2)The tax effect of the restructuring charge was estimated to be $230,000.
(3)Crank determined that the cost of disposing and removing facilities and equipment during 2010 $312,000.
(4)The tax effect associated with the disposal and removal of facilities and equipment are $95,000.
(5)Crank Corp.made cash payments to severed employees and lessors for lease terminations in 2010 equal to $78,000.
(6)The tax effect of the severance payments and lease cancellations was $19,000.

Accepted Answer

The answer of Summarize how the following information about Crank...

Question 12

Under the fair value method of accounting for stock options,firms must value stock options on the

Accepted Answer

A)  grant date. 
B)  intrinsic date. 
C)  measurement date. 
D)  fair value date. 
A)  grant date. 
B)  intrinsic date. 
C)  measurement date. 
D)  fair value date.

Question 13

The _________________________ is the date a firm gives a stock option to employees.

Accepted Answer

The answer of The _________________________ is the date a firm...

Question 14

Porter Corporation NOTE: The following multiple choice questions require present value information.
On January 1,2012,Porter Corporation signed a five-year noncancelable lease for certain machinery.The terms of the lease called for:
  For the year ended December 31,2012,Porter should record depreciation expense for the leased equipment equal to

Accepted Answer

A)  $55,000 
B)  $39,927 
C)  $47,912 
D)  $0 
A)  $55,000 
B)  $39,927 
C)  $47,912 
D)  $0

Question 15

NOTE: The following problem requires present value information.
On January 1,2012,Porter Corporation signed a five-year noncancelable lease for certain machinery.The terms of the lease called for:
   Required:

Accepted Answer

a.To record the capital lease

Question 16

One of the conditions that must be met to recognize an estimated loss from a contingency is that the amount of loss can be estimated with ________________________________________.

Accepted Answer

reasonable

Question 17

Which kind of dividend is a return of the original investment by shareholders?

Accepted Answer

A)  cash dividend 
B)  stock dividend 
C)  liquidating dividend 
D)  scrip dividend 
A)  cash dividend 
B)  stock dividend 
C)  liquidating dividend 
D)  scrip dividend

Question 18

Porter Corporation NOTE: The following multiple choice questions require present value information.
On January 1,2012,Porter Corporation signed a five-year noncancelable lease for certain machinery.The terms of the lease called for:
  Under which of the following conditions does the equipment lease qualify for capital lease accounting?

Accepted Answer

A)  The lease does not contain a bargain purchase option. 
B)  The lease term is equal to or greater than 75% of the asset's economic life. 
C)  The lease term is equal to or greater than 90% of the asset's economic life. 
D)  The lease does not transfer ownership to the lessee at the end of the lease term. 
A)  The lease does not contain a bargain purchase option. 
B)  The lease term is equal to or greater than 75% of the asset's economic life. 
C)  The lease term is equal to or greater than 90% of the asset's economic life. 
D)  The lease does not transfer ownership to the lessee at the end of the lease term.

Question 19

In some countries the account Reserve for Contingencies may be most comparable to which of the following accounts for a company reporting under U.S.GAAP?

Accepted Answer

A)  Contingency Expense 
B)  Retained Earnings Appropriated for Contingencies 
C)  Unearned Contingency Fees 
D)  Contingency Losses 
A)  Contingency Expense 
B)  Retained Earnings Appropriated for Contingencies 
C)  Unearned Contingency Fees 
D)  Contingency Losses

Question 20

Which of the following is the date on which the dividend distribution occurs?

Accepted Answer

A)  date of record 
B)  commitment date 
C)  date of declaration 
D)  date of payment 
A)  date of record 
B)  commitment date 
C)  date of declaration 
D)  date of payment

Discuss the method of accounting for employee stock options.In your answer discuss the how the accounting has changed during recent years.

FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except:

All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:

Which is the first date when employees can exercise their stock options?

Under U.S.GAAP,which of the following items would require a lessee to classify a lease of equipment as a capital lease?

Which of the following is the typical tradeoff when issuing preferred stock?

Liabilities requiring the future delivery of goods or services appear on the balance sheet at the ______________________________ of those goods and services.

Which kind of dividends typically pay dividends with additional shares of the corporation's stock?

Under the fair value method of accounting for stock options,firms must value stock options on the

The _________________________ is the date a firm gives a stock option to employees.

NOTE: The following problem requires present value information. On January 1,2012,Porter Corporation signed a five-year noncancelable lease for certain machinery.The terms of the lease called for: Required:

One of the conditions that must be met to recognize an estimated loss from a contingency is that the amount of loss can be estimated with ________________________________________.

Which kind of dividend is a return of the original investment by shareholders?

In some countries the account Reserve for Contingencies may be most comparable to which of the following accounts for a company reporting under U.S.GAAP?

Which of the following is the date on which the dividend distribution occurs?

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

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Exam 6: Financing Activities

Discuss the method of accounting for employee stock options.In your answer discuss the how the accounting has changed during recent years.

FASB has set forth all of the following conditions for recognizing transfers of receivables as sales only if the following conditions of surrendering control of the receivables are met except:

All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:

Which is the first date when employees can exercise their stock options?

Under U.S.GAAP,which of the following items would require a lessee to classify a lease of equipment as a capital lease?

Which of the following is the typical tradeoff when issuing preferred stock?

Liabilities requiring the future delivery of goods or services appear on the balance sheet at the ______________________________ of those goods and services.

Which kind of dividends typically pay dividends with additional shares of the corporation's stock?

Under the fair value method of accounting for stock options,firms must value stock options on the

The _________________________ is the date a firm gives a stock option to employees.

NOTE: The following problem requires present value information. On January 1,2012,Porter Corporation signed a five-year noncancelable lease for certain machinery.The terms of the lease called for: Required:

One of the conditions that must be met to recognize an estimated loss from a contingency is that the amount of loss can be estimated with ________________________________________.

Which kind of dividend is a return of the original investment by shareholders?

In some countries the account Reserve for Contingencies may be most comparable to which of the following accounts for a company reporting under U.S.GAAP?

Which of the following is the date on which the dividend distribution occurs?

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters