Log in
Accounting
1
answer
0
watching
164
views

Choose the correction answer

7. Stock warrants outstanding shouldbe classified as

a. liabilities.

b. reductions of capital contributed in excess ofpar value.

c. assets.

d. None of these answers are correct.

8. The date on which to measure thecompensation element in a stock option granted to a corporateemployee ordinarily is the date on which the employee

a. is granted the option.

b. has performed all conditions precedent toexercising the option.

c. may first exercise the option.

d. exercises the option.

9. Which of the following isnot a characteristic of a noncompensatory stockpurchase plan?

a. It is open to almost all full-time employees.

b. The discount from market price is small.

c. The plan offers no substantive optionfeature.

d. All of these are characteristics.

10. On January 1, 2014, Trent Companygranted Dick Williams, an employee, an option to buy 400 shares ofTrent Co. stock for $30 per share, the option exercisable for 5years from date of grant. Using a fair value option pricing model,total compensation expense is determined to be $3,600. Williamsexercised his option on September 1, 2014, and sold his 400 shareson December 1, 2014. Quoted market prices of Trent Co. stock during2014 were:

January1 $30 per share

September1 $36 per share

December1 $40 per share

The service period is for two years beginning January 1, 2014. As aresult of the option granted to Williams, using the fair valuemethod, Trent should recognize compensation expense for 2014 on itsbooks in the amount of

a. $4,000.

b. $3,600.

c. $1,800.

d. $0.

11. Incomputing earnings per share for a simple capital structure, if thepreferred stock is cumulative, the amount that should be deductedas an adjustment to the numerator (earnings) is the

a. preferred dividends in arrears.

b. preferred dividends in arrears times (one minusthe income tax rate).

c. annual preferred dividend times (one minus theincome tax rate).

d. None of these answers are correct.

12. The following information isavailable for Barone Corporation:

January 1,2015 Sharesoutstanding 2,000

April 1,2015 Sharesissued 320,000

July 1,2015 Treasury sharespurchased 120,000

October 1,2015 Shares issued in a 100%stockdividend 2,200

The number of shares to be used incomputing earnings per common share for 2015 is

a. 4,520,800.

b. 4,380,000.

c. 4,360,000.

d. 2,730,000.

13. Incomputing earnings per share, the equivalent number of shares ofconvertible preferred stock are added as an adjustment to thedenominator (number of shares outstanding). If the preferred stockis cumulative, which amount should then be added as an adjustmentto the numerator (net earnings)?

a. Annual preferred dividend

b. Annual preferred dividend times (one minus theincome tax rate)

c. Annual preferred dividend times the income taxrate

d. Annual preferred dividend divided by the incometax rate

14. Fugate Company had 900,000 sharesof common stock issued and outstanding at December 31, 2014. OnJuly 1, 2015 an additional 750,000 shares were issued for cash.Fugate also had stock options outstanding at the beginning and endof 2015 which allow the holders to purchase 225,000 shares ofcommon stock at $20 per share. The average market price of Fugate'scommon stock was $25 during 2015. What is the number of shares thatshould be used in computing diluted earnings per share for the yearended December 31, 2015?

a. 1,695,000

b. 1,455,000

c. 1,331,250

d. 1,320,000

Watch
1
answer
0
watching
164
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Irving Heathcote
Irving HeathcoteLv2
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

On January​ 1, Year​ 1, Davenport Corporation granted anemployee an option to purchase 10 comma 000 of​ Davenport's $10 parcommon stock at​ $30 per share. The options became exercisable onDecember​ 31, Year​ 3, after the employee completed three years ofservice. The option was exercised on February​ 1, Year 4. Themarket prices of​ Davenport's stock were as​ follows: January​ 1,Year​ 1, $40; December​ 31, Year​ 3, $60; and February​ 1, Year​ 4,$55. An options pricing model estimated the value of the options at$ 20 each on the grant date. For Year​ 1, Davenport shouldrecognize compensation expense of​ ________. (Do not roundintermediary calculations. Only round your final answer to thenearest​ dollar.)

A. $ 200,000

B. $ 100,000

C. $ 66,667

D. ​$0

1. (TCO A) On July 1, 2010, an interest paymentdate, $60,000 of Parks Co. bonds were converted into 1,200 sharesof Parks Co. common stock, each having a par value of $45 and amarket value of $54. There is $2,400 unamortized discount on thebonds. Using the book value method, Parks would record (Points :5)

no change in paid-incapital in excess of par.
a $3,600 increase in paid-incapital in excess of par.
a $7,200 increase in paid-incapital in excess of par.
a $4,800 increase in paid-incapital in excess of par.


Question 2. 2. (TCO A) On March 1, 2010, RuizCorporation issued $800,000 of 8% nonconvertible bonds at 104,which are due on February 28, 2030. In addition, each $1,000 bondwas issued with 25 detachable stock warrants, each of whichentitled the bondholder to purchase for $50 one share of Ruizcommon stock, par value $25. The bonds without the warrants wouldnormally sell at 95. On March 1, 2010, the fair market value ofRuiz's common stock was $40 per share and the fair market value ofthe warrants was $2.00. What amount should Ruiz record on March 1,2010 as paid-in capital from stock warrants?
(Points : 5)

$28,800

$33,600

$41,600

$40,000

Question 3. 3. (TCO A) On January 1, 2010,Trent Company granted Dick Williams, an employee, an option to buy100 shares of Trent Co. stock for $30 per share, the optionexercisable for 5 years from date of grant. Using a fair valueoption pricing model, total compensation expense is determined tobe $900. Williams exercised his option on September 1, 2010, andsold his 100 shares on December 1, 2010. Quoted market prices ofTrent Co. stock during 2010 were as follows:

January1 $30 per share
September1 $36 per share
December1 $40 per share

The service period is for 2 years, beginning January 1, 2010. As aresult of the option granted to Williams, using the fair valuemethod, Trent should recognize compensation expense for 2010 on itsbooks in the amount of (Points : 5)

$1,000.

$900.

$450.

$0.

Question 4. 4. (TCO A) Wonderful Inc. issued toits existing common stockholders 2000 warrants. Each warrantentitles the stockholder to purchase 3 shares of common stock at aprice of $4 each. The common stock of the company is selling in thestock exchange at $6 each. If Wonderful has 20,000 shares of commonstock outstanding throughout the year and its Net Income is $8,000after paying the preferred dividends, what will be the dilutive EPSof Wonderful incorporation under treasury stock method? Round youranswer to two decimal points. (Points : 5)

$4
$0.40

$0.30

$0.36

Question 5. 5. (TCO A) At December 31, 2011 and2010, Miley Corp. had 180,000 shares of common stock and 10,000shares of 5%, $100 par value cumulative preferred stockoutstanding. No dividends were declared on either the preferred orcommon stock in 2011 or 2010. Net income for 2011 was $400,000. For2011, earnings per common share amounted to (Points : 5)

$2.22.
$1.94.
$1.67.
$1.11.

On December 29, 2015, Kolek Company granted 100,000 stock options to a group of 100 employees, enabling each employee to buy 1,000 shares for $20 per share. On the grant date, the shares had a market value of $16 per share and the options had a market value of $3.00 per option. The options vest over a 3-year period and become exercisable on January 1, 2019. Kolek Company expects that, based on historical turnover, they will lose approximately 3 of the employees receiving the options per year during the vesting period. Compensation expense will be recognized uniformly over the vesting period.

Assuming all 100,000 options are exercised, what will be the net increase or decrease in stockholders’ equity as a result of the granting and exercising of the options.

a. A decrease of $300,000
b. An increase of $2,000,000
c. An increase of $1,700,000
d. An increase of $2,300,000

Weekly leaderboard

Home
Homework Help 3,900,000
Accounting 580,000
Start filling in the gaps now
Log in