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