Chapter 18

When a company issues its shares of stock for a non-cash asset, which of the following provide evidence of fair value of the transaction? - an independent appraisal of the value of the asset - the amount of cash that would be paid to purchase the asset - the quoted market price for the shares -the net book value of the asset - the book value of the existing shares

- an independent appraisal of the value of the asset - the amount of cash that would be paid to purchase the asset - the quoted market price for the shares

In year 1, Sofia Corp. issued 1,000 shares of $1 par value common stock for $10 per share. In year 4, Sofia repurchased and immediately retired 100 shares of the stock at $6 per share. Which of the following entries would be included in the journal entry to retire the shares?

-Debit paid in capital in excess of par $900 -Debit common stock $100 - Credit paid in capital- shares repurchase $400

which of the following are characteristics of treasury stock?

-It does not receive a dividend -Is stock that is repurchased by the company -It has no voting rights

Debt

Represents a creditor's interest that must be repaid

Equity

Represents an ownership interest in the company

When does a dividend become a liability to a corporation?

When it is declared by the board of directors

if preferred shares must be redeemed by a certain date, they should be classified as

debt

a distribution of assets to shareholders is referred to as a

dividends

In a corporation, shareholders' liability is

limited to the amount of the investment

When the dividend exceeds the balance in retained earnings, the excess is referred to as a _______ dividend.

liquidating

Nonowner changes to equity during a particular accounting period that are not reported as part of traditional net income are reported as _________ _________ income.

other comprehensive

Net assets equals

shareholders' equity