CPA - FAR F7

In a compensatory stock option plan for which the grant and exercise dates are different, the stock options outstanding account should be reduced at the:

Exercise date

In the financial statements of employee benefit pension plans and trusts, the plan investments are reported at:

Fair value

A company has multiple defined benefit pension plans. A pension asset reported in the statement of financial position represents the amount by which the:

Fair value of plan assets exceeds the projected benefit obligation for the company's overfunded plans

Define common stock and list the basic properties

Common Stock: Residual ownership interest Basic rights include: *voting rights *dividend rights *rights to share in distribution of assets if corporation is liquidated, after satisfaction o f creditor and preferreed stockholders' claims

Which of the following financial instruments issued by a public company should be reported on the issuer's books as a liability on the date of issuance?

Common stock that contains an unconditional redemption

A corporation was organized in January, Year 1 with authorized capital of 10 par value common stock. On February 1, Year 1, shares were issued at par for cash. On March 1, year 1, the corporation's attorney accepted 5000 shares of the common stock in settlement for legal services with a fair value of 60000. Additional paid-in capital would increase on:

Feb 1, Year 1- No Mar 1, Year 1- Yes

Stock dividends on common stock should be recorded at their fair market value by the investor when the related investment is accounted for under which of the following methods?

Cost- No Equity- No

If a corporation sells some of its treasury stock at a price that exceeds its cost, this excess should be:

Credited to additional paid-in capital

Baker Co. issued 100,000 shares of common stock in the current year. On October 1, Baker repurchased 20000 shares of its common stock on the open market for 50.00 per share. At that date, the stock's par value was 1.00 and the average issue price was 40.00 per share. Baker uses the cost method for treasury stock transactions. On December 1, Baker reissued the stock for 60.00 per share. What amount should Baker report as treasury stock gain at December 31?

$0

During the current year, Onal Co. purchased 10,000 shares of its own stock at 7 per share. The stock was originally issued at 6. The firm sold 5000 of the treasury shares for 10 per share. The firm uses the cost method to account for treasury stock. What amount should Onal report in its income statement for these transactions?

$0

On December 1, Line Corp. received a donation of 2000 shares of its $5 par value common stock from a stockholder. On that date, the stock's market value was 35 per share. The stock was originally issued for 25 per share. By what amount would this donation cause total stockholders' equity to decrease?

$0

The following information pertains to Meg Corp.: Dividends on its 1000 shares of 6%, $10 par value cumulative preferred stock have not been declared or paid for 3 years Treasury stock that cost $15000 was reissued for 8000 What amount of retained earnings should be appropriated as a result of these items?

$0

Universe Co. issued 500,000 shares of common stock in the current year. Universe declared a 30o/o stock dividend. The market value was $50 per share, the par value was $10, and the average issue price was $30 per share. By what amount will Universe decrease stockholders' equity for the dividend?

$0

Lino Co.'s worksheet for the preparation of its current-year statement of cash flows included the following: Accounts receivable 12/31: $29,000 1/1: $23,000 Allowance for uncollectible accounts 12/31: 1,000 1/1: 800 Prepaid rent expense 12/31: 8,200 1/1: 12,400 Accounts payable 12/31: 22,400 1/1: 19,400 Lino's current-year net income is $150,000. What amount should Lino include as net cash provided by operating activities in the statement of cash flows?

$151,400 Net cash flow from operating activities may be reported indirectly by removing from net income the effects of (1) all deferrals of past operating cash receipts and cash payments, (2) all accruals of expected future operating cash receipts and cash payments, (3) all financing and investing activities, and (4) all noncash operating transactions. The increase in net accounts receivable [($29,000 - $1,000) - ($23,000 - $800) = $5,800] is a deduction from net income because it reflects noncash revenue. The decrease in prepaid expenses ($12,400 - $8,200 = $4,200) is a noncash expense and should be added. The increase in accounts payable ($22,400 - $19,400 = $3,000) is an amount not yet paid to suppliers and should be added. Thus, the net operating cash inflow is $151,400 ($150,000 - $5,800 + $4,200 + $3,000).

Martin Co. had net income of $70,000 during the year. Depreciation expense was $10,000. The following information is available: Accounts receivable increase: $20,000 Equipment gain on sale increase: 10,000 Nontrade notes payable increase: 50,000 Prepaid insurance increase: 40,000 Accounts payable increase: 30,000 What amount should Martin report as net cash provided by operating activities in its statement of cash flows for the year?

$40,000 Under the indirect method, the net cash flow from operating activities is determined by adjusting the net income for the effect of (1) noncash revenue and expenses that were included in net income, (2) items included in net income whose cash effects relate to investing or financing cash flows, (3) all deferrals of past operating cash flows, and (4) all accruals of expected future operating cash flows. Accordingly, the net cash flows provided by operating activities can be calculated as follows: Net income for the period: $70,000 Add noncash losses and expenses included in net income (add depreciation expense): 10,000 Subtract gains and revenues whose cash effects are related to investing or financing cash flows (subtract gain on sale of equipment): (10,000) Add increase in current operating liabilities (add increase in accounts payable): 30,000 Subtract increase in current operating assets (subtract increase in accounts receivable of $20,000 and increase in prepaid insurance of $40,000): (60,000) Net cash provided by operating activities: $40,000 Nontrade notes payable is not an operating item. Thus, the increase in nontrade notes payable has no effect on operating cash flows.

Mag, Inc.'s December 31, year 2 unadjusted current assets and stockholders' equity sections are as follows: Current assets : Cash $ 15,000 Investments in MES (including $75,000 of Mag, Inc. common stock) 100,000 Trade accounts receivable 85,000 Inventories 37,000 Total $237,000 Stockholders ' equity: Common stock $556,000 Retained earnings (deficit) (56,000) Total $500,000 The investments and inventories are reported at their costs, which approximate market values. Mag's stockholders' equity at 12/31/Y2 should be

$425,000

The following is the stockholders' equity section of Harbor Co.'s balance sheet at December 31: 500000 1100000 800000 2400000 -200000 2200000 Harbor has insignificant amounts of convertible securities, stock warrants, and stock options. What is the book value per share of Harbor's common stock?

$49

On which of the following dates is a public entity required to measure the cost of employee services in exchange for an award of equity interests, based on the fair v=market value of the award?

Date of grant

Kuchman Kookware issued 40,000 shares of its 8.00 par value common stock for $9 on January 1, Year 1. Kuchman repurchased 1,000 shares at $8 per share on April 1, Year 2, resold 500 shares at $9 per share on July 1, Year 2 and, on October 1, Year 2, resold the final 500 shares at $5 per share. Assuming Kuchman uses the par value method of accounting for its treasury stock, retained earnings at December 31, Year 2 would be reduced by:

$500

East Corp., a calendar-year company, had sufficient retained earnings in Year 1 as a basis for dividends, but was temporarily short of cash. East declared a dividend of 10000 on April 1, Year 1, and issued promissory notes to its stockholders in lieu of cash. The notes, which were dated April 1, Year 1, had a maturity date of March 31, Year 2, and a 10% interest rate. How should East account for the scrip dividend and related interest?

Debit retained earnings for 100000 on April 1, year 1, and debit interest expense for 7500 on December 31, Year 1

Ian Co. is calculating earnings per share amounts for inclusion in the Ian's annual report to shareholders. Ian has obtained the following information from the controller's office as well as shareholder services: Net income from January 1 to December 31 $125,000 Number of outstanding shares: January 1 to March 31 - 15,000 April 1 to May 31 - 12,500 June 1 to December 31 - 17,000 In addition, Ian has issued 10,000 incentive stock options with an exercise price of $30 to its employees and a year-end market price of $25 per share. What amount is Ian's diluted earnings per share for the year ended December 31? $4.63 $4.85 $7.35 $7.94

$7.94 Weighted average shares outstanding for basic EPS = 15,000(3/12) + 12,500(2/12) + 17,000(7/12) = 15,750. Basic EPS = $125,000/15,750 = $7.94. The stock options are antidilutive because the exercise price exceeds the average market price of the stock. Such options would not be assumed exercised. Under the treasury stock method, assuming exercise would result in more shares being purchased for the treasury than issued upon assumed exercised. The result is a decrease in the denominator of diluted EPS causing diluted EPS to exceed basic EPS. Therefore, in this case, diluted and basic EPS are equal.

When a company declares a cash dividend, retained earnings is decreased by the amount of the dividend on the date of:

Declaration

Bal Corp. declared a $25,000 cash dividend on May 8 to shareholders of record on May 23, payable on June 3. As a result of this cash dividend, working capital

Decreased on May 8

List some common properties of preferred stock

*convertible, callable *redeemable *dividends can be cumulative and/or participating

Lem Co. which accounts for treasury stock under the par value method, acquired 100 shares of its $6 par value common stock for $10 per share. The shares had originally been issued by Lem for $7 per share. By what amount would Lem's additional paid-in capital from common stock decrease as a result of the acquisition?

100

Gregory's on Ormond, Inc. grants its president 2000 stock options on January 1, Year 1 that give him rights to purchase shares of the company for 40 per share on December 31, Year 2. At the time the options are granted, the fair value of the options totaled 20000. At December 31, Year 1 the company's stock sold the 45 per share and at December 31, Year 2 the selling price of the stock was 55 per share. On December 31, Year 2, the president resigned from the company and did not elect to exercise the options. In its Year 2 financial statements, Gregory's on Ormond would recognize compensation expense relative to the options of:

10000

Long Co. had 100000 shares of common stock issued and outstanding at January 1, Year 1. During Year 2, Long took the following actions: Declared a 2 for 1 stock split, when the fair value of the stock was 80 per share Declared a .50 per share cash dividend In Long's statement of stockholders' equity for Year 2, what amount should Long report as dividends?

100000

On January 2, Year 2, Lake Mining Co.'s board of directors declared a cash dividend of 400000 to stockholders of record on January 18, Year 2, payable on February 10, Year 2. The dividend is permissible under law in the state where Lake is incorporated. Selected balances from its December 31, Year 1 balance sheet are as follows: 100000 500000 150000 300000 The 400000 dividend includes a liquidating dividend of:

100000

Big Books Inc has the following information related to its defined benefit pension plan: 1500000 1400000 200000 60000 1740000 1670000 220000 6% 8% Big Books makes an annual pension plan contribution of 200000. The company's employees had an average remaining service life of 20 years on December 31, Year 1. The company paid benefits of 70000 in Year 2 and expects to pay benefits totaling 170000 to retired employees in Year 3. Big Books has an effective tax rate of 30 percent. The actual return on plan assets was 10 percent. What is the funded status of Big Books' pension plan on December 31, Year 1?

100000 underfunded

Parker Co amended its pension plan on January 2 of the current year. It also granted 600000 of unrecognized prior service costs to its employees. The employees are all active and expect to provide 2000 service years in the future, with 350 service years this year. What is Parker's unrecognized prior service cost amortization for the year under US GAAP?

105000

In September, Year 1, West Corp. made a dividend distribution of one right for each of its 120,000 shares of outstanding common stock. Each right was exercisable for the purchase of 1/100 of a share of West's $50 variable rate preferred stock at an exercise price of $80 per share. On March 20, Year 5, none of the rights had been exercised, and West redeemed them by paying each stockholder $0.10 per right. As a result of this redemption, West's stockholders' equity was reduced by:

12000

At December 31, Year 2 and Year 3, Apex Co. had 3000 shares of 100 par, 5% cumulative preferred stock outstanding. No dividends were in arrears as of December 31, Year 1. Apex did not declare a dividend during Year 2. During Year 3, Apex paid a cash dividend of 10000 on its preferred stock. Apex should report dividends in arrears in its Year 3 financial statements as a:

Disclosures of 20000

Pott Co. owned shares in Rose Co. On December 1, Pott declared and distributed a property dividend on Rose shares when their fair value exceeded the carrying amount. As a consequence of the dividend declaration and distribution, the accounting effects would be:

Dividend Rec at: Fair value RE- Decreased

At December 31, Year 1, Eagle Corp. reported 1750000 of appropriated retained earnings for the construction of a new office building, which was completed in Year 2 at a total cost of 1500000. In Year 2, Eagle appropriated 1200000 of retained earnings for the construction of a new plant. Also, 2000000 of cash was restricted for the retirement of bonds due in Year 3. In its Year 2 balance sheet, Eagle should report what amount of appropriated retained earnings?

1200000

On January 1, Year 1, the board of directors of a corporation granted 10000 stock options to the CEO. Each option permits the purchase of one share of stock at 25 per share, the current market price of the stock. The options are exercisable on December 31, Year 4, as long as the CEO is still employed. The options expire on December 31, Year 5. The grant date fair value of each option is 5. The corporation must recognize:

12500 of compensation expense per year for four years

Asp Co was organized on January 2, Year 1, with 30,000 authorized shares of $10 par common stock. During Year 1, the corporation had the following capital transactions: Issued 20000 shares of 15 per share Purchased 5000 shares at 17 per share Reissued the 5000 shares held in treasury at 20 per share Asp used the US GAAP par value method to record the purchase and reissuance of the treasury shares. In its December 31, Year 1, balance sheet, what amount should Asp report as additional paid-in capital?

125000

The following trial balance of Trey Co. at December 31, has been adjusted except for income tax expense. Cash 550000 AR 1650000 Prepaid taxes 300000 AP 120000 CS 50000 APIC 680000 RE 630000 Foreign currency 430000 Revenues 3600000 Expenses 2600000 =5530000 Additional information -Estimated tax payments of 300000 were charged to prepaid taxes. Trey has not yet recorded income tax expense. There were no differences between financial statement and income tax income, and Trey's tax rate is 30%. -Included in accounts receivable is 500000 due from a customer. Special terms granted to this customer require payment in equal semiannual installments of 1250000 every April 1 and October 1. In Trey's December 31 balance sheet, what amount should be reported as total retained earnings?

1330000

East Co. issued 1000 shares of its $5 par common stock to Howe as compensation for 1000 hours of legal services performed. howe usually bills 160 per hour for legal services. On the date of issuance, the stock was trading on a public exchange at 140 per share. By what amount should the additional paid-in capital account increase as a result of this transaction?

135000

AmeriGene Inc reported net periodic pension cost of 400000 in the current year, calculated as follows: 300000 175000 (100000) 40000 (15000) 400000 AmeriGene has an overfunded pension plan. How will the amortization of the net gain affect the current year balance sheet under US GAAP?

15000 increase in retained earnings

Jones Fortune Company issued 10000 shares of 15 par common stock on February 1 for 20 per share. The company bought back 2000 shares when the share price fell to 16 per share on August 31 and then resold 1000 shares when the price rebounded to 22.share on December 15. Jones accounts for its treasury stock transactions using the cost method. What amount would Jones report as Common Stock in the equity section of its December 31 balance sheet?

150000

The following information pertains to Gali Co's defined benefit pension plan for the current year: 350000 525000 110000 85000 In computing net periodic pension cost, what amount should Gali use as actual return on plan assets?

150000

A company provides a defined benefit pension plan for all of its employees. The fair value of the plan assets at year-end is 45000000. The values of the accumulated benefit obligation and projected benefit obligation at year-end are 46000000 and 60000000, respectively. The company expects to make benefit payments totaling 2000000 next year. What amount should the company report in the year-end financial statements as a liability in connection with the defined benefit pension plan?

15000000

On January 1, Year 1, a company issued its employees 10000 shares of restricted stock. On January 1, Year 2, the company issued to its employees an additional 20000 shares of restricted stock. Additional information about the company's stock is as follows: 20 22 25 30 The shares vest at the end of a four-year period. There are no forfeitures. What amount should be recorded as compensation expense for the 12-month period ended December 31, Year 2?

175000

Cobb Co. purchased 10000 shares (2% ownership) of Roe Co. on February 12, Year 1. Cobb received a stock dividend of 2000 shares on March 31, Year 1, when the carrying amount per share on Roe's books was $35 and the market value per share was 40. Roe paid a cash dividend of 1.50 per share on September 15, Year 1. In Cobb's income statement for the year ended October 31, Year 1, what amount should Cobb report as dividend income?

18000

Barrel Corporation had service and interest costs of 50000 related to its defined benefit pension plan for the year ended December 31, Year 7. The company's unrecognized prior service cost was 200000 at December 31, Year 6 and the average remaining service life of the company's employees was 20 years. Plan assets earned an expected and actual return of 10% during Year 7. The company made contributions to the plan of 25000 and paid benefits of 30000 during the year. The pension plan had plan assets with a fair value of 300000 at December 31, Year 6. The pBO was 400000 at December 31, Year 6 and 420000 at December 31, Year 7. What should Barrel Corporation report in accumulated other comprehensive income for this pension plan at December 31, Year 7 under US GAAP?

190000

Porter Co. began its business last year and issued 10,000 shares of common stock at $3 per share. The par value of the stock is 1 per share. During January of the current year, Porter bought back 500 shares at 6 per share, which were reported by Porter as treasury stock. The treasury stock shares were reissued later in the current year at 10 per share. Porter used the cost method to account for its equity transactions. What amount should Porter report as paid-in capital related to its treasury stock transactions on its balance sheet for the current year?

2000

Jan Corp. amended its defined benefit pension plan, granting a total credit of $100,000 to four employees for services rendered prior to the plan's adoption. The employees, A, B, C, and D, are expected to retire from the company as follows: "A" will retire after three years "B" and "C" will retire after five years "D" will retire after seven years What is the amount of prior service cost amortization in the first year?

20000

On January 2 of the current year, Kine Co. granted Morgan, its president, compensatory stock options to buy 1000 shares of Kine's 10 par common stock. The options call for a price of 20 per share and are exercisable for three years following the grant date. Morgan exercised the options on December 31 of the current year. The market price of the stock was 45 on January 45 on January 2 and 70 on December 31. Using an acceptable options pricing model, Morgan determined that the fair value of the options granted was 30000. By what net amount should stockholders' equity increase as a result of the grant and exercise of the options?

20000

The following information pertains to the defined benefit pension plan of the Cabot Corporation as of December 31, Year 11 and Year 12: 250000 285000 200000 295000 The pension plan had unrecognized prior service cost of 50000 and unrecognized net gain of 30000 at December 31, Year 11. Service cost for year 12 was 30000. The discount rate was 8% and the expected and actual return on plan assets was 10% for both Year 11 and Year 12. Cabot's employees have an average remaining service life of 10 years. For the last three years, Cabot has made benefit payments of 15000 per year. The company expects to pay the same amount in Year 13. What amount will Cabot report in accumulated other comprehensive income for this pension plan on December 31, Year 11 under US GAAP?

20000

Big Books, Inc has the following information related to its defined benefit pension plan 1500000 1400000 200000 60000 1740000 1670000 220000 6% 8% Big Books makes an annual pension plan contribution of 200000. The company's employees had an average remaining service life of 20 years on 12/31/Year 6. The company paid benefits of 70000 in Year 7 and expects to pay benefits totaling 170000 to retired employees in Year 8. Big Books has an effective tax rate of 30%. The actual return on plan assets was 10%. What would Big Books report as total net periodic pension cost for Year 7?

205000

Pugh Co. reported the following in its statement of stockholders' equity on January 1 of the current year: 500000 1500000 516000 =2516000 (40000) =2476000 The following events occurred during the current year: 1000 shares of treasury stock were sold for 10000 10000 shares of previously unissued common stock were sold for 12 per share The distribution of a 2-for-1 stock split resulted in the common stock's per share par value being halved Pugh accounts for treasury stock under the cost method. Laws in the state of Pugh's incorporation protect shares held in treasury from dilution when stock dividends or stock splits are declared. The number of outstanding common shares at December 31 should be:

212000

Beck Corp. issued 200,000 shares of common stock when it began operations in year 1 and issued an additional 100,000 shares in year 2. Beck also issued preferred stock convertible to 100,000 shares of common stock. In year 3, Beck purchased 75,000 shares of its common stock and held it in Treasury. At December 31, year 3, how many shares of Beck's common stock were outstanding?

225000

At December 31, High Horse Company has the following pension plan information: 1100000 1135000 275000 340000 7% The expected return on plan assets was used to calculate net periodic pension cost. No actuarial gains or losses were incurred during the year. What is the net gain to be reported in other comprehensive income under US GAAP?

23000

An entity authorized 500,000 shares of common stock. At January 1, Year 2, the entity had 110,000 shares of common stock issued and 100,000 shares of common stock outstanding. The entity had the following transactions in Year 2: Issued 15000 shares of common stock Resold 2500 shares of treasury stock Completed a 2 for 1 common stock split What is the total number of shares of common stock that the entity has outstanding at the end of Year 2?

235000

Plack Co. purchased 10,000 shares (2o/o ownership) of Ty Corp. on February 14, Year 1. Plack received a stock dividend of 2,000 shares on April 30, Year 1, when the market value per share was $35. Ty paid a cash dividend of $2 per share on December 15, Year 1. In its Year 1 income statement, what amount should Plack report as dividend income?

24000

Selected information from the accounts of Row Co. at December 31, Year 5, follows: Total income since incorporation $420,000 Total cash dividends paid 130,000 Total value of property dividends distributed 30,000 Excess of proceeds over cost of treasury stock sold, accounted for using the cost method 110,000 In its December 31, Year 5, financial statements, what amount should Row report as retained earnings?

260000

Gruber Enterprises started its defined pension plan on January 1, Year 1. By the beginning of Year 3, the company had accumulated 300000 in pension plan assets and was already making benefit payments to its employees. During Year 3, Gruber paid out 20000 in benefits and contributed 70000 to the plan. The plan assets had a fair market value of 377000. What was the amount on the return on plan assets in Year 3?

27000

On January 1, Year 1, Lord Corp. granted stock options for 10,000 shares at $38 per share as additional compensation for services to be rendered over the next three years. Using an acceptable option pricing model, Lord calculated total compensation cost of $90,000. The options are exercisable during a 4-year period beginning January 1, Year 4, by grantees still employed by Lord. Market price of Lord's stock was $47 per share at the grant date. No stock options were terminated during Year 1. In Lord's Year 1 income statement, what amount should be reported as compensation expense pertaining to the options?

30000

Rhino Robots Inc has the following information related to its defined benefit pension plan: 2130000 2525000 3500000 3850000 420000 The average remaining service period of Rhino's employees is 20 years. What is the net loss amortization that Rhino will include in its net periodic pension cost under US GAAP?

3500

A company that uses the accrual method of accounting started the fiscal year with assets of 600000 and liabilities of 400000. During the fiscal year the company recorded credit sales of 250000, of which 8000 remained to be collected at year-end, and incurred expenses of 90000, of which 72000 was paid in cash. A stock dividend value at 10000 was declared and issued to stockholders during the year. What is the year-end balance of total equity?

360000

Cyan Corp. issued 20,000 shares of $5 par common stock at $10 per share. On December 31, Year 1, Cyan's retained earnings were $300,000. In March, Year 2, Cyan reacquired 5,000 shares of its common stock at $20 per share. In June, Year 2, Cyan sold 1,000 of these shares to its corporate officers for $25 per share. Cyan uses the cost method to record treasury stock. Net income for the year ended December 31, Year 2, was $60,000. At December 31, Year 2, what amount should Cyan report as retained earnings?

360000

On March 4, Year 1, Evan Co. purchased 1000 shares of LVC common stock at 80 per share. On September 26, Year 1, Evan received 1000 stock rights to purchased an additional 1000 shares at 90 per share. The stock rights had an expiration date of February 1, Year 2. On September 30, Year 1, LVC's common stock had a market value, ex-rights, of 95 per share and the stock rights had a market value of 5 each. What amount should Evan report on its September 30, Year 1, balance sheet for investment in stock rights?

4000

Mag, Inc.'s December 31 unadjusted current assets and stockholders' equity sections are as follows: 15000 100000 85000 37000 =237000 556000 -56000 =500000 The investments and inventories are reported at their costs, which approximate market values. Mag's stockholders' equity at December 31 should be:

425000

Zen Transportation Inc's pension trustee provided the company with the following information for its defined benefit pension plan at December 31: 2500000 1950000 375000 50000 135000 440000 What amount would Zen report in accumulated OCI related to its pensions plan on its December 31 balance sheet under US GAAP?

460000

A defined benefit pension plan had the following activity during the fiscal year: 92000 340000 45400 155000 36750 What should be reported as the total additions in the pension plan's statement of changes in net assets available for benefits?

468750

Bounty Co provides postretirement health care benefits to employees who have completed at least 10 years service and are aged 55 years or older when retiring. Employees retiring from Bounty have a median age of 62, and no one has worked beyond age 65. Fletcher is hired at 48 years old. The attribution period for accruing Bounty's expected postretirement health care benefit obligation to Fletcher is during the period when Fletcher is aged:

48 to 58

On March 1, Rya Corp. issued 1,000 shares of its $20 par value common stock and 2,000 shares of its $20 par value convertible preferred stock for a total of $80,000. At this date, Rya's common stock was selling for $36 per share, and the convertible preferred stock was selling for $27 per share. What amount of the proceeds should be allocated to Rya's convertible preferred stock?

48000

Carter components is computing the components of its net periodic pension cost for the current year ended December 31. Carter has calculated that its service cost is 60000 and has computed interest cost as 42000. The average remaining service life of its employees is 8 years. The return on 50000 in plan assets was anticipated to be 8 percent but was actually 8.5 percent. The pension benefit obligation at the beginning of the year was 560000 and at the end of the year 602000. The company has an unrecognized gain of 60000. To what extent will the unrecognized gain reduce current-year net periodic pension cost under US GAAP?

500

Jensen performed legal services to assist Balm Co. in accomplishing its initial organization. Jensen accepted 1,000 shares of $5 par common stock in Balm as payment for his services. The Balm shares were not yet publicly traded, but they had a book value of $4 per share. Jensen provided 48 hours of service, which is normally billed at $125 per hour. By what amount should the common stock account increase?

5000

On June 1, Year 1, Oak Corp. granted stock options to certain key employees as additional compensation. The options were for 1000 shares of Oak's 2 par value common stock at an option price of 15 per share. Market price of this stock on June 1, Year 1, was 17 per share. Using an acceptable option pricing model Oak determined that total compensation cost under the stock option plan model Oak determined that total compensation cost under the stock option plan was 5000. The options were exercisable beginning January 2, Year 2, and expire on December 31, Year 3. On April 1, Year 2, when Oak's stock was trading at 21 per share, all the options were exercised. What amount of pretax compensation should Oak report in Year 1 in connection with the options?

5000

Zen Transportation Inc's pension trustee provided the company with the following information for its defined benefit pension plan at December 31: 2500000 1950000 375000 50000 440000 Under IFRS what amount would Zen report in accumulated other comprehensive income related to its pension plan on its December 31 balance sheet?

50000

A company granted its employees 100000 stock options on January 1, Year 1. The stock options had a grant date fair value of 15 per option and a three-year vesting period. On January 1, Year 2, the company estimated the fair value of the stock options to be 18 per option. Assuming that the company did not grant any additional options or modify the terms of any existing option grants during Year 2, what amount of share-based compensation expense should the company report for the year ended December 31, Year 2?

500000

The following information relates to a company's defined benefit pension plan at December 31 1035000 1250000 113000 167000 737000 What amount should the company report as its pension liability at December 31?

513000

Pugh Co. reported the following in its statement of stockholders' equity on January 1 of the current year: 500000 1500000 516000 =2516000 (40000) =2476000 The following events occurred during the current year: 1000 shares of treasury stock were sold for 10000 10000 shares of previously unissued common stock were sold for 12 per share The distribution of a 2-for-1 stock split resulted in the common stock's per share par value being halved Pugh accounts for treasury stock under the cost method. Laws in the state of Pugh's incorporation protect shares held in treasury from dilution when stock dividends or stock splits are declared. In Pugh's December 31 statement of stockholders' equity, the par value of the issued common stock should be:

550000

Rudd Corp. had 700,000 shares of common stock authorized and 300,000 shares outstanding at December 31, 2016. The following events occurred during 2017: January 31 Declared 10% stock dividend June 30 Purchased 100,000 shares August 1 Reissued 50,000 shares November 30 Declared 2-for-1 stock split At December 31, 2017, how many shares of common stock did Rudd have outstanding?

560000

Godart Co. issued $4,500,000 notes payable as a scrip dividend that matured in five years. At maturity, each shareholder of Godart's three million shares will receive payment of the note principal plus interest. The annual interest rate was 10%. What amount should be paid to the stockholders at the end of the fifth year?

6,750,000

Mio Corp was the sole stockholder of Plasti Corp. On September 30, Mio declared a property dividend of Plasti's 2000 outstanding shares of $1 par value common stock, distributable to Mio's stockholders. On that date, the book value of Plasti's stock was 1.50 per share. Immediately after the distribution, the market value of Plasti's stock was 4.50 per share. What amount should Mio report in its financial statements as gain on disposal of the Plasti stock?

6000

On December 1, Nilo Corp. declared a property dividend of marketable securities to be distributed on December 31 to stockholders of record on December 15. On December 1, the marketable securities had a carrying amount of 60000 and a fair value of 78000. What is the effect of this property dividend on Nilo's retained earnings, after all nominal accounts are closed?

60000 decrease

Hoyt Corp.'s current balance sheet reports the following stockholders' equity: 5°/o cumulative preferred stock, par value $100 per share; 2,500 shares issued and outstanding $250,000 Common stock, par value $3.50 per share; 100,000 shares issued and outstanding 350,000 Additional paid-in capital in excess of par value of common stock 125,000 Retained earnings 300,000 Dividends in arrears on the preferred stock amount to $25,000. If Hoyt were to be liquidated, the preferred stockholders would receive par value plus a premium of $50,000. The book value per share of common stock IS:

7.00

Wall Corp.'s employee stock purchase plan specifies the following: For every $1 withheld from employees' wages for the purchase of Wall's common stock, Wall contributes $2 The stock is purchased from Wall's treasury stock at market price on the date of purchase The following information pertains to the plan's current year transactions: 350000 1050000 900000 Before payroll taxes, what amount should Wall recognize as expense in the current year for the stock purchase plan?

700000

Zulu Transportation Inc's pension trustee provided the company with the following information for its defined benefit pension plan at December 31: 240000 75000 385000 Under IFRS what amount should Zulu report in accumulated other comprehensive income related to its pension plan on its December 31 balance sheet?

75000

On June 1, Year 1, Ward Corp established a defined benefit pension plan for its employees. The following information was available at May 31, Year 3: 14500000 12000000 200000 7000000 2550000 What is the funded status of Ward's pension plan at May 31, Year 3?

7500000 underfunded

On January 1, Year 1, a company grants 5000 nonqualified stock options to an employee with a strike price of 3 per option and fair value of 8 per option. ALl the options vest at the end of five years from the grant date. At the end of Year 1, the company's stock price was 10 per share. What amount of annual stock compensation cost should the company report for Year 1?

8000

On January 1, Year 1, Ward Corp. granted stock options to corporate executives for the purchase of 20000 shares of the company's 20 par value common stock at 48 per share. All stock options were exercised on December 28, Year 1. Using an acceptable option pricing model, Ward calculated total compensation cost of 240000. The quoted market prices of Ward's 20 par value common stock were as follows: 45 60 As a result of the grant and exercise of the stock options and the issuance of the common stock, Ward's additional paid-in capital increased by:

800000

The following information pertains to Seda Co's pension plan: 72000 10% 18000 15000 If no change in actuarial estimates occurred during the year, Seda's projected benefit obligation at December 31 was:

82200

The following changes in Vel Corp.'s account balances occurred during the current year: 89000 27000 60000 6000 Except for a 13000 dividend payment and the year's earnings, there were no changes in retained earnings for the current year. What was Vel's current year net income?

9000

Barrel Corporation had service and interest costs of 50000 related to its defined benefit pension plan for the year ended December 31, Year 7. The company's unrecognized prior service cost was 200000 at December 31, Year 6 and the average remaining service life of the company's employees was 20 years. Plan assets earned an expected and actual return of 10% during Year 7. The company made contributions to the plan of 25000 and paid benefits of 30000 during the year. The pension plan had plan assets with a fair value of 300000 at December 31, Year 6. The PBO was 400000 at December 31, Year 6 and 420000 at December 31, Year 7. What is funded status of Barrel Corporation's pension plan at December 31, Year 7?

95000 underfunded

At the beginning of Year 1, a company amends its defined benefit pension plan for an additional 500000 in prior service cost. The amendment covers employees with a 10-year average remaining service life. At the end of Year 1, what is the net entry to accumulated other comprehensive income, ignoring income tax effects?

A 450000 debit

At year-end a company had a defined benefit pension plan with a projected benefit obligation of 350000; a net gain of 140000 that was not previously recognized in a net periodic pension cost; and prior service cost of 210000 that was not previously recognized in net periodic pension cost. What amount should be reported in accumulated other comprehensive income related to the company's defined benefit pension plan at year-end?

A debit balance of 70000

An entity sponsors a defined benefit pension plan that is underfunded by $800,000. A $500,000 increase in the fair value of plan assets would have which of the following effects on the financial statements of the entity?

A decrease in the liabilities of the entity

A company has a defined benefit pension plan for its employees. On December 31, year one, the accumulated benefit obligation is $45,900, the projected benefit obligation is $68,100, and the fair value of the plan assets is $62,000. What amount, if any, related to the defined benefit plan should be recognized in the balance sheet at December 31, year one?

A liability of 6100

What are the two required financial statements of a defined contribution retirement plan?

A statement of net assets available for benefits of the plan and a statement of changes in net assets available for benefits

A corporation declared a dividend, a portion of which was liquidating. How would this distribution affect each of the following?

APIC- Decrease RE- Decrease

The following format was used by Gee, Inc. for its year 2 statement of owners' equity: CS 9000 APIC 800000 RE 175000 When both the 100% and the 5% stock dividends were declared, Gee's common stock was selling for more than its $1 par value. How would the 5% stock dividend affect the additional paid-in capital and retained earnings amounts reported in Gee's Year 2 statement of owners' equity?

APIC- Increase RE- Decrease

On November 2, Year 1, Finsbury, Inc. issued warrants to its stockholders giving them the right to purchase additional 20 par value common shares at a price of 30. The stockholders exercised all warrants on March 1, Year 2. The shares had market prices of 33, 35, and 40 on November 2, Year 1, December 31, Year 1 and March 1, Year 2, respectively. What were the effects of the warrants on Finsbury's additional paid-in capital and net income?

APIC- Increased in Year 2 Net Income- No effect

Under US GAAP what is the present value of all future retirement payments attributed by the pension benefit formula to employee services rendered prior to that date and based on past and current compensation levels only?

Accumulated benefit obligation

In Year 1, Fogg Inc issued 10 par value common stock for 25 per share. No other common stock transactions occurred until March 31, Year 3, when Fogg acquired some of the issued shares for 20 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?

Additional paid-in capital is decreased

When collectibility is reasonably assured, the excess of the subscription price over the stated value of the no par common stock subscribed should be recorded as:

Additional paid-in capital when the subscription is recorded

The following information is from Mabel Co.'s year-end financial statements for the current and previous years: Current year Prepaid Expenses = $10,000 Accounts Payable = 50,000 Land = 250,000 Previous year Prepaid Expenses = $20,000 Accounts Payable = 30,000 Land = 600,000 Land was sold during the current fiscal year for cash resulting in a loss of $40,000. What is Mabel's net adjustment to net income to determine net cash from operating activities? A. ($70,000) B. $0 C. $30,000 D. $70,000

Answer is D. $70,000 The net adjustment to net income is as follows: The following are added to the Net income: Loss on disposal of land (fixed asset) - $40,000 Decrease in current asset (Prepaid Expenses) - $10,000 Increase in liabilities (Accounts payable) - $20,000 Net adjustment = $(40,000 + 10,000 + 20,000) = $70,000

How would the 5% stock dividend affect each of the following?

Assets- no effect Total SE- No effect RE- Decrease

How should plan investments be reported in a defined benefit plan's financial statements?

At fair value

Baler Co. prepared its statement of cash flows at year-end using the direct method. The following amounts were used in the computation of cash flows from operating activities: Beginning inventory $ 200,000 Ending inventory 150,000 Cost of goods sold 1,200,000 Beginning accounts payable 300,000 Ending accounts payable 200,000 What amount should Baler report as cash paid to suppliers for inventory purchases? A. $1,200,000 B. $1,250,000 C. $1,300,000 D. $1,350,000

B. $1,250,000 Cash paid to suppliers is determined by adjusting CGS for the effect of the accrual of accounts payable and the increase or decrease in inventory. CGS 1,200,000 Subtract: Decrease in inventory (50,000) - since inventory decreased, more goods were used than purchased Add: Decrease in A/P 100,000 - since AP decreased, more cash was paid than purchased on account Cash paid to suppliers 1,250,000

Which defined benefit pension plan financial statement would report the amount of benefits paid to beneficiaries during the year? I. Statement of Changes in Net Assets Available for Benefits II. Statement of Changes in Accumulated Plan Benefits

Both I and II

On April 1, Hyde Corp., a newly formed company, had the following stock issued and outstanding: Common stock, no par, 1 stated value, 20000 shares originally issued for 30 per share Preferred stock, 10 par value, 6000 shares originally issued for 50 per share Hyde's April 1 statement of stockholders' equity should report:

CS- 20000 PS- 60000 APIC- 820000

A company issued rights to its existing shareholders without consideration. The rights allowed the recipients to purchase unissued common stock for an amount in excess of par value. When the rights are issued, which of the following accounts will be increased?

CS- No APIC- No

An employer's obligation for postretirement health benefits that are expected to be provided to or for an employee must be fully accrued by the date the:

Employee is fully eligible for benefits

Which of the following defined benefit pension plan disclosures should be made in a company's financial statements? I. The funded status of the plan II. The amount of net periodic pension cost for the period III. The fair value of plan assets

I II and III

What information should be disclosed by a company providing health care benefits to its retirees? I. The assumed health care cost trend rate used to measure the expected cost of benefits covered by the plan II. The accumulated postretirement benefit obligation

I and II

Assume that a company maintains a defined benefit pension plan. The company's net periodic pension cost for the year would be reported on: I. The company's income statement II. The defined pension plan's Statements of Changes in Net Assets Available for Benefits

I only

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

In a note to the financial statements

For the last 10 years, Woody Co. has owned cumulative preferred stock issued by Hadley Inc. During Year 11, Hadley declared and paid both the Year 11 dividend and the Year 10 dividend in arrears. How should Woody report the Year 10 dividend in arrears that was received in Year 11?

Include in Year 11 income from continuing operations

Under US GAAP, interest cost included in the net periodic pension cost recognized for by an employer sponsoring a defined benefit pension plan represents the:

Increase in the projected benefit obligation due to the passage of time

When a property dividend is declared and the market value of the property exceeds its book value, the excess:

Increases net income for the period

Nest Co. issued 100000 shares of common stock. Of these, 5000 were held as treasury stock at December 31, Year 1. During Year 2, transactions involving Nest's common stock were as follows: 1000 shares of treasury stock were sold 10000 shares of previously unissued stock were sold A 2-for-1 stock split took effect Laws in Nest's state of incorporation protect treasury stock from dilution. At December 31, Year 2, how many shares of Nest's common stock were issued and outstanding?

Issued- 220000 Outstanding- 212000

Of the 125000 shares of common stock issued be Vey Corp., 25000 shares were held as treasury stock at December 31, Year 1. During Year 2, transactions involving Vey's common stock were as follows: 13000 treasury shares were distributed to officers as part of a stock compensation plan A 3-for-1 stock split took effect Vey purchased 5000 of its own shares to discourage an unfriendly takeover. These shares were not retired At December 31, Year 2, how many shares of Vey's common stock were issued and outstanding?

Issued- 375000 Shares Outstanding- 334000

On January 15, Year 1, Rico Co. declared its annual cash dividend on common stock for the year ended January 31, Year 1. The dividend was paid on February 9, Year 1, to stockholders of record as of January 28, Year 1. On what date should Rico decrease retained earnings by the amount of the dividend?

January 15, Year 1

A company sponsors two defined benefit pension plans. The following information relates to the plans at year-end: 800000 1000000 1000000 700000 What amounts should the company report in its balance sheet related to the plans?

Liability of 200000; asset of 300000

Aldrich Co. distributes cash dividends to its shareholders during the current year. The dividends are declared on March 9 and are payable to shareholders as of the date of record, which is April 15. The dividends are actually paid on May 19. At which of the following dates would the dividends become a liability to Aldrich?

March 9

A property dividend should be recorded in retained earnings at the property's

Market value at date of declaration

Murphy Co. had 200,000 shares outstanding of $10 par common stock on March 30 of the current year. Murphy reacquired 30,000 of those shares at a cost of $15 per share and recorded the transaction using the cost method on April 15. Murphy reissued the 30,000 shares at $20 per share and recognized a $50,000 gain on its income statement on May 20. Which of the following statements is correct?

Murphy's net income for the current year is overstated

An overfunded single-employer defined benefit postretirement plan should be recognized in a classified statement of financial position as a

Noncurrent asset

A company has an underfunded defined benefit pension plan. During the current year, the company uses the years-of-service method to amortize its prior service cost. What effect will the amortization of prior service cost have on the company's current-year financial statements?

Other comprehensive income will be increased

Ole Corp. declared and paid a liquidating dividend of $100,000. This distribution resulted in a decrease in Ole's:

PIC- Yes RE- No

Gains and losses on the purchase and resale of treasury stock are reflected in:

Paid-in capital and retained earnings accounts

Which of the following costs is unique to postretirement health-care benefits?

Per capita claims

Cross Corp had outstanding 2000 shares of 11% preferred stock, $50 par. On August 8, Cross redeemed and retired 25% of these shares for 22500. On that date, Cross' additional paid-in capital from preferred stock totaled 30,000. To record this transaction, Cross should debit its capital accounts as follows:

Preferred stock- 25000 Additional paid-in capital- (2500) Retained earnings- --

Division Corporation has 20,000 shares of 5.00 participating 9 percent cumulative preferred stock and 100000 shares of 2.00 common stock. On JUly 1, the board of Division declared a 30,000 dividend at the time the common stock was selling for 25 per share and the preferred stock was selling for 30. The total dividends paid to each class of stock on the payment date was:

Preferred- 10,000 Common- 20,000

At December 31, Year 1 and Year 2, Carr Corp had outstanding 4000 shares of 100 par value 6% cumulative preferred stock and 20000 shares of 10 par value common stock. At December 31, Year 1, dividends in arrears on the preferred stock were 12000. Cash dividends declared in Year 2 totaled 44000. Of the 44000, what amounts were payable on each class of stock?

Preferred- 36000 Common- 8000

Visor Co maintains a defined benefit pension plan for its employees. Under US GAAP, the service cost component of Visor's net periodic pension cost is measured using the:

Projected benefit obligation

How would the declaration of a 15% stock dividend by a corporation affect each of the following:

RE- Decrease Total SE- No effect

Instead of the usual cash dividend, Evie Corp. declared and distributed a property dividend from its overstocked merchandise. The excess of the merchandise's carrying amount over its market value should be:

Reported as a reduction in income before income from continuing operations

A retained earnings appropriation can be used to:

Restrict earnings available for dividends

A company whose stock is trading at 10 per share has 1000 shares of 1 par common stock outstanding when the board of directors declares a 30% common stock dividend. Which of the following adjustments should be made when recording the stock dividend?

Retained earnings is debited for 300

Tem Co. issued rights to its existing stockholders without consideration. A stockholder received a right to buy one share for each 20 shares held. The exercise price was in excess of par value, but less than the current market price. Retained earnings decreases when:

Rights are issued- No RIghts are exercised- No

Which of the following financial statements may be prepared, but is not required to be prepared, for both defined pension plans and defined contribution pension plans?

Statement of Cash Flows

On which defined pension plan financial statement would a pension plan's interest be reported?

Statement of Changes in Net Assets Available for Benefits

Which of the following is a financial statement required of both defined benefit pension plans and defined contribution pension plans?

Statement of Changes in net Assets Available for Benefits

A corporation declared a 10% stock dividend on 15,000 shares outstanding of $5 par common stock when the fair value was $10 per share. Which change in the corporation's stockholders' equity accounts is correct? A. Retained earnings is decreased by $15,000. B. Additional paid-in-capital is increased by $15,000. C. Common stock is decreased by $7,500. D. Common stock is increased by $15,000.

Stock Dividend = Number of Shares x Stock Dividend Rate Stock Dividend = 15000 Shares x 10% Stock Dividend = 1500 Shares Par Value of Stock Dividend = 1500 Shares x $5 per Share = $7500 Additional Paid in Capital = 1500 Shares x ($10 - $5) Per Share = $7500 Retained Earnings will be decreased by $15000. Retained Earnings Dr. $15000 To Common Equity $7500 To Additional Paid in Capital $7500 So, The correct answer is A. Retained earnings is decreased by $15,000.

All of the following distributions to stockholders are considered asset or capital distributions, except:

Stock splits

A company has 10,000 shares of common stock issued and 2,000 shares of treasury stock. The par value of the stock is $10 per share. On January 1, year 1, the company declared a 5% dividend to be paid in cash on June 30, year 1. What journal entry should the company record on the declaration date? A. Debit retained earnings for $4,000 and credit dividends payable for $4,000. B. Debit dividends expense for $4,000 and credit dividends payable for $4,000. C. Debit dividends expense for $5,000 and credit dividends payable for $5,000. D. Debit retained earnings for $5,000 and credit dividends payable for $5,000.

The correct answer is A. Debit retained earnings for $4,000 and credit dividends payable for $4,000. When dividends are declared by the company prior to actual cash payment, the retained earnings account is debited and dividends payable account is credited on declaration date. The total cash dividend to be paid is based on the number of shares outstanding, which is the total shares issued less treasury stock. Outstanding shares = 10,000 - 2,000 = 8,000 shares The cash dividend declared = (8000 \times10)\times 5\% =\$ 4,000(8000×10)×5%=$4,000

Alder Corp. had the following stockholders' equity balances at the beginning of the current year: Common stock 200,000 shares authorized, $1 par; 15,000 shares issued and outstanding $15,000 Additional paid-in capital 24,000 Retained earnings 11,000 During the current year, Alder issued 2,000 shares of common stock with a fair value of $35 per share to Terry Brady on a subscription basis. Terry made a down payment of $3,500, but shortly thereafter defaulted on the subscription. What would be the debit to additional paid-in capital if Alder returned the $3,500 to Terry? A. $73,500 B. $70,000 C. $68,000 D. $66,500

The correct answer is C. The additional paid-in capital is the excess amount the company receives over and above the par value of shares during the time of the IPO, or when the shares are issued for sale. The additional paid-in capital formula = (Issue price - Par Value) x Number of shares The additional paid-in capital formula = (35 - 1) \times× 2,000 = \$68,000$68,000 The debit to additional paid-in capital will be \$68,000$68,000 The $3,500 returned by Terry will only affect the initial cash transaction recorded when the shares are issued.

Footnote disclosures in the financial statements for pensions do not require inclusion of which of the following?

The differences in executive and non-executive plans

Which of the following would not be reported on a defined benefit pension plan's Statement of Changes in Accumulated Plan Benefits?

The effect of appreciation of the plan's investments on the plan's actuarial present value of plan benefits

Each of the following is a component of the changes in the net assets available for benefits of a defined benefit pension plan trust, except:

The net change in the actuarial present value of accumulated plan benefits

Each of the following transactions will cause a decrease in stockholders' equity, except:

The sale of treasury stock at less than cost

The funded status of a defined benefit pension plan for a company should be reported in:

The statement of financial position

Harmony Co. has a single-employer defined benefit pension plan. Harmony should report a liability related to the plan equal to which of the following amounts?

The unfunded projected benefit obligation

Grid Corp. acquired some of its own common shares at a price greater than both their par value and original issue price but less than their book value. Grid uses the cost method of accounting for treasury stock. What is the impact of this acquisition on total stockholders' equity and the book value per common share?

Total stockholders' equity- Decrease Book value per share- Increase

On July 31, Year 10, Tern Co amended its single employee defined benefit pension plan by granting increased benefits for services provided prior to Year 10. Under IFRS, this past service cost will be reflected in the financial statements for:

Year 10 only

Earnings per share disclosure is required for which of the following: a. investment companies b. wholly-owned subsidiaries of public companies c. companies who have made a filing with the SEC in preparation of a sale of public securities d. non-public companies

c. companies who have made a filing with the SEC in preparation of a sale of public securities

when computing the weighted average of common shares outstanding for basic earnings per share, convertible securities are: a. recognized whether they are dilutive or anti-dilutive b. ignored c. recognized only if they are dilutive d. recognized only if they are anti-dilutive

ignored