Exam 4: Statements of Financial Position and Changes in Equity; Disclosure Notes

If a company issues debt that is convertible at the corporation's option,in substance,the debt is equity.

The crucial aspect of debt is that the creditors can demand payment.

When convertible bonds are submitted for conversion,all of the following must be updated except:

Which of the following forms part of the definition of a financial liability?

A stock option plan is a compensatory plan if:

What is convertible debt? Why would a company issue convertible debt?

The incremental method to accounting for convertible bonds means that:

Once the market price of shares rises above the conversion price on convertible bonds,the bond ceases to trade as debt,and is effectively traded as equity.

Credit risk is an issue for financial instruments and must be disclosed because:

Stock options have no intrinsic value when the market price of the share exceeds its conversion price.

JMR Ltd.issues a $150,000,7%,five-year debenture at par,repayable at maturity in common shares at DWWR's option.Interest is repayable annually in cash.Prepare the journal entry at issuance.

If a company issues debt that is convertible at the shareholder's option,in substance,the debt is:

A forward contract is:

A non-compensatory stock option plan means that:

Silo Corp.granted to Donna,its superstar accountant,the option to purchase Silo common shares for $10,on Jan.1,20x1.The market price of the shares on that date was $20.The options can be exercised during the period Jan.1,20x4 through Jan.1,20x6.The number of shares under option is determined by a formula based on Silo earnings each year.The number of shares actually under option will be the formula value on Dec.31,20x3.That formula estimated the following number of shares under option at the end of years: 20x1,200; 20x2,300.The formula determined the number of shares at Dec.31,20x3 to be 400.The market prices for Silo shares at the end of years: 20x1,$25; 20x2,$40,20x3,$50.What is the recorded compensation expense for 20x2,for Donna?

JMR Ltd.issued $300,000 of 7%,8 year,non-convertible bond with detachable stock purchase warrants.KER Corp.purchased the entire issue.Each $1,000 bond carries 20 warrants.Each warrant entitles KER to purchase one common share for $20.The bond issue sells for 104 exclusive of accrued interest.Shortly after issuance,the warrants trade for $5 each and the bonds were quoted at 103 ex-warrants.The market value of the bonds and warrants using the proportional method was:

Under IFRS,forfeitures which occur under a stock-based compensation structure are accrued throughout the vesting period.

S Corporation created a stock option plan for its two top executives.The plan provided that each executive would receive 1,000 options,which would enable him or her to purchase 100 shares at 75 percent of the market price on the date the options,became exercisable.The options were exercisable in two years.At the date of granting the options,the market price of the shares was $12 per share.The date of measurement for the stock option plan was the:

All of the following are common reasons for a company to issue convertible bonds except:

A financial instrument is any contract that gives rise to a financial asset of one party and a financial liability or equity instrument of another party.