Exam 13: Equity Financing

Unlike a stock split,a stock dividend requires a formal journal entry in the financial accounting records because stock dividends

On June 1,Continental Company issued 8,000 shares of its $10 par common stock to Divide for a tract of land.The stock had a fair market value of $18 per share on this date.On Divide's last property tax bill,the land was assessed at $96,000.Continental should record an increase in Additional Paid-In Capital of

On January 1,2013,Delgado Company establishes a stock option plan that grants 100 qualified managers options for a computed number of shares of $20 par-value common stock at a computed option price per share.The exercise price is $40,the market price of the company's common stock on the grant date.Computation of the number of options awarded will be made three years after the option is granted and is based on the increase in net income over the three-year period using the following formula: The options are nontransferable and must be exercised not earlier than three years,nor later than five years,from the grant date.Employment with the company is required through the exercise date.For simplicity,it is assumed that all the vested options are exercised near the end of 2017,when the price of the stock was $70. Management estimates that earnings growth over the three-year period will be approximately 25 percent.Forfeitures are estimated to be approximately 2 percent per year from the grant date to the vesting date.Use of an option pricing model yields a fair value for the options of $10 per option. At December 31,2013,earnings per share have grown 10 percent over the 2012 EPS.Management,however,continues to believe that the 25 percent growth amount over the three-year period is accurate.Two of the grantees have left the firm.The stock price has increased to $44 per share. At December 31,2014,no changes in estimates are made,even though earnings growth for the two-year period is only 15 percent.Market price per share has increased to $51 per share.An additional three grantees have left the company. At December 31,2015,the three-year growth in earnings is only 20 percent.Only 90 of the grantees are still with the company,and these individuals vest with their options.The stock price is now $48 per share. All vested options are exercised on December 28,2017,when the market price of the company's stock is $70 per share. Required: Prepare all journal entries necessary to account for this stock compensation plan.

Undistributed stock dividends should be reported as

At the date of the financial statements,common stock shares issued would exceed common stock shares outstanding as a result of the

On January 2,2014 the board of directors of Moorehaven Mining Corporation declared a cash dividend of $1,200,000 to stockholders of record on January 18,2014,and payable on February 10,2014.The dividend is permissible by law in Moorehaven's state of incorporation.Selected data from Moorehaven's December 31,2013,balance sheet follow: The $1,200,000 dividend includes a liquidating dividend of

Stock warrants outstanding should be classified as

On September 1,2014,Clownfish Corporation declared and issued a 15 percent common stock dividend.Prior to this date,Clownfish had 25,000 shares of $2 par value common stock that were both issued and outstanding.The market value of Clownfish' stock was $20 per share at the time the dividend was issued.As a result of this stock dividend,Clownfish' total stockholders' equity

Lexan Company reported the following for the year ended December 31,2014 (all items are net of income taxes): Comprehensive income (loss)for the year ended December 31,2014,would be

A company declared a cash dividend on its common stock in December 2013,payable in January 2014.Retained Earnings would

On June 30,2014,Lynch Co.declared and issued a 15 percent stock dividend.Prior to this dividend,Lynch had 50,000 shares of $10 par value common stock issued and outstanding.The market value of Lynch Co.'s common stock on June 30,2014,was $24 per share.As a result of this stock dividend,by what amount would Lynch's total stockholders' equity increase (decrease)?

Waltham Corporation was organized on January 2 with 100,000 authorized shares of $10 par value common stock.During the year,Waltham had the following capital transactions: Waltham used the par value method to record the purchase of the treasury shares. What would be the balance in the paid-in capital from treasury stock account at December 31?

Which of the following is NOT a component of comprehensive income?

Which of the following shareholder rights is most commonly enhanced in an issue of preferred stock?

When a property dividend is declared and the book value of the property exceeds its market value,the dividend is recorded at the

Under international accounting requirements,which of the following equity reserves is part of distributable equity?

Farnon Company has not declared or paid dividends on its cumulative preferred stock in the last three years.These dividends should be reported

In 2014,Climber Corporation issued for $110 per share,18,000 shares of $100 par value convertible preferred stock.One share of preferred stock may be converted into three shares of Climber's $30 par value common stock at the option of the preferred shareholder.On December 31,2015,all of the preferred stock was converted into common stock.The market value of the common stock at the conversion date was $40 per share.What amount should be credited to the common stock account on December 31,2015?

An adjustment to retained earnings as a result of a conversion of preferred stock to common stock most likely would occur when

Which of the following is least likely to affect the retained earnings balance?