Question 1

When calculating earnings per share, dividends declared on noncumulative preferred stock, but not paid, should be

Accepted Answer

A)  added to net income in the earnings per share numerator
B)  excluded from the earnings per share numerator
C)  deducted from net income in the earnings per share numerator
D)  deferred from the earnings per share numerator until paid C

Question 2

The two defined sections of stockholders' equity under IFRS are

Accepted Answer

A)  contributed capital and other equity
B)  share capital and retained earnings
C)  contributed capital and retained earnings
D)  share capital and other equity D

Question 3

IFRS and GAAP are similar in regard to computing earnings per share components.However, the calculation of the impact from the exercise of options differs.
Required:

Accepted Answer

The answer of IFRS and GAAP are similar in regard...

Question 4

Corporations are required to report accumulated other comprehensive income (or loss)in stockholders' equity.
Required:
If a corporation has more than one type of other comprehensive income, how may it report these types in its stockholders' equity?

Accepted Answer

The answer of Corporations are required to report accumulated other...

Question 5

Monster, Inc.determined the following information concerning its common stock during 2010:
 $\begin{array}{ll}
\text { January 1 } & \text { 10,500 shares outstanding } \
\text { March 1 } & \text { Issued a 2-for-1 stock split } \
\text { July 1 } & \text { Issued 1,000 additional shares } \
\text { October 1 } & \text { Reacquired 2,000 shares }
\end{array}$
 Required:
What should Monster, Inc.use as the denominator for its basic earnings per share calculation for 2010?

Accepted Answer

The answer of Monster, Inc.determined the following information concerning its...

Question 6

On October 1, 2010, Black Company declared a property dividend payable in the form of marketable equity securities classified as "available for sale" for financial accounting purposes.The marketable equity securities will be distributed to the common stockholders on December 1, 2010.The investment in equity securities originally cost Black $410, 000 on August 1, 2010.The investment's fair value on various dates is as follows: $\begin{array}{ll}
\text { October } 1,2010 & \$ 430,000 \
\text { December } 1,2010 & 435,000 \
\text { December } 31,2010 & 440,000
\end{array}$
 The amount credited to Realized Gain on Disposal of Investments resulting from this dividend transaction should be

Accepted Answer

A)  $ 0
B)  $20, 000
C)  $25, 000
D)  $30, 000

Question 7

All of the following types of dividends will result in an increase in liabilities as a result of recording the declaration of a dividend except a (Assume the dividends are paid or distributed on a later date.)

Accepted Answer

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

Question 8

Given the following convertible securities, determine the appropriate ranking to determine their impact on diluted earnings per share calculations:

Accepted Answer

A)  1, 2, 3
B)  3, 1, 2
C)  2, 1, 3
D)  1, 3, 2

Question 9

Murray Co.had 60, 000 common shares outstanding on January 1, 2010.The company sold an additional 4, 500 shares on March 1, issued a 3-for-1 stock split on September 1, and reacquired 3, 600 shares on December 1.The company also declared, but has not paid, a dividend on its 10, 000 shares of 5%, $10 par, noncumulative preferred stock.The net loss for the year was $33, 190.
Required:
Compute Murray Co.'s basic earnings per share for 2010.

Accepted Answer

The answer of Murray Co.had 60, 000 common shares outstanding...

Question 10

On January 1, 2010, Smith Company had 21, 000 shares of common stock outstanding and issued an additional 4, 500 shares on May 1.The company declared and paid a cash dividend of $30, 000 and earned $330, 000 net income.The earnings per share for the year was

Accepted Answer

A)  $15.00
B)  $13.75
C)  $12.94
D)  $12.50

Question 11

If a company makes a prior period adjustment, which of the following describes how it must be reported?

Accepted Answer

A)  The adjustment is recorded in retained earnings, and previous years' financial statements presented for comparative purposes are not changed.
B)  The adjustment is recorded in retained earnings, and previous years' financial statements presented for comparative purposes are adjusted.
C)  The adjustment is reported in the current period's income statement as a separate item.
D)  The adjustment is recorded as a deferred asset or deferred liability and amortized using the straight-line method.

Question 12

Exhibit 17-1 The Zoeller Corporation's stockholders' equity accounts have the following balances as of December 31, 2010:
$\begin{array}{lc}
\text { Common stock, } \$ 10 \text { par }(30,000 \text { sharesissued }\
\text { and outstanding) } & \$ 300,000 \
\text { Additional paid-in capital } & 2,000,000 \
\text { Retained earnings } & \$ 5,700,000 \
\text { Total stockholder's equity } & \$ 8,000,000
\end{array}$

- Refer to Exhibit 17-1.On January 2, 2011, the board of directors of Zoeller declared a 5% stock dividend to be distributed on January 31, 2011.The market price per share of Zoeller's common stock was $30 on January 2 and $32 on January 31.As a result of this stock dividend, the retained earnings account should be decreased by

Accepted Answer

A)  zero; only a memorandum entry is required
B)  $15, 000
C)  $45, 000
D)  $48, 000

Question 13

When the basic and diluted earnings per share amounts are disclosed on the income statement, additional disclosures are made in the footnotes.
Required:
Describe the information contained in the footnotes concerning the basic and diluted earnings per share.

Accepted Answer

The answer of When the basic and diluted earnings per...

Question 14

When recording the receipt of donated assets, the credit could be to

Accepted Answer

A)  Retained Earnings
B)  Donated Capital
C)  Gain on Donations
D)  a contra account to the asset

Question 15

Under the treasury stock method, the number of shares of common stock assumed to be reacquired is determined by using the

Accepted Answer

A)  ending market price of the stock
B)  average market price of the stock
C)  beginning market price of the stock
D)  par value of the stock

Question 16

Which of the following could be a component of other comprehensive income (loss)?

Accepted Answer

A)  realized gains or losses from sale of investments in available-for-sale securities
B)  translation adjustments from converting the financial statements of a company's foreign operations into U.S.dollars
C)  gains (losses) on extraordinary items
D)  warranty liability adjustments

Question 17

Which statement best reflects the issues associated with the computation of diluted earnings per share?

Accepted Answer

A)  Diluted earnings per share represents the potential impact of all shares of common stock.
B)  When presenting comparative financial statements, the impact of convertible bonds must be included for both years.
C)  Common stock options are considered dilutive when the average market price is greater than the option price.
D)  The impact on the denominator is always the determinate of whether or not to use diluted earnings per share.

Question 18

On January 1, 2010, Kuper Corporation had 12, 000 shares of common stock outstanding.Kuper reacquired 1, 000 shares on May 1, and issued another 5, 000 shares on September 1.The company also has 10, 000 shares of $20 par, 10%, noncumulative preferred stock outstanding on which no dividends have been declared during the last two years.The company had a $45, 360 loss for the year.The earnings per share for the year is

Accepted Answer

A)  ($5.03) 
B)  ($3.78) 
C)  ($3.49) 
D)  ($1.95)

Question 19

On January 1, 2010, Walters Corporation had 24, 000 shares of common stock outstanding.On April 1, it reacquired 2, 400 shares; on July 1, it issued 10, 800 shares; on October 1, it issued another 9, 600 shares; and on December 1, it reacquired 600 shares.The weighted average number of common shares outstanding for 2010 was

Accepted Answer

A)  26, 950
B)  28, 900
C)  29, 950
D)  41, 400

Question 20

The Farmer Company has issued 10%, fully participating, cumulative preferred stock with a total par value of $300, 000 and common stock with a total par value of $900, 000.Dividends for one previous year are in arrears.How much cash will be paid to the preferred stockholders and the common stockholders, respectively, if cash dividends of $222, 000 are distributed at the end of the current year?

Accepted Answer

A)  $85, 500 and $136, 500
B)  $78, 000 and $144, 000
C)  $60, 000 and $162, 000
D)  $55, 500 and $166, 500

Exam 17: Earnings Per Share and Retained Earnings

When calculating earnings per share, dividends declared on noncumulative preferred stock, but not paid, should be

The two defined sections of stockholders' equity under IFRS are

IFRS and GAAP are similar in regard to computing earnings per share components.However, the calculation of the impact from the exercise of options differs. Required:

Corporations are required to report accumulated other comprehensive income (or loss)in stockholders' equity. Required: If a corporation has more than one type of other comprehensive income, how may it report these types in its stockholders' equity?