On December 31, 2021, Bramble Company issues 151, 000 stock - appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARS is estimated to be $5 per SAR on December 31, 2022; $2 on December 31, 2023; $10 on December 31, 2024; and $8 on December 31, 2025. The service period is 4 years, and the exercise period is 7 years. (a) Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock - appreciation rights plan. (If the compensation decreases from prior year enter the amount as a negative number in the table e.g. - 25,000 or (25,000).) Date Fair Value Cumulative Compensation Recognizable Percentage Accrued Compensation Accrued to Date Expense 2022 Expense 2023 Expense 2024 Expense 2025 12/31/22 12/31/23 12/31/24 12/31/25

On December 31, 2021, Bramble Company issues 151, 000 stock - appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARS is estimated to be $5 per SAR on December 31, 2022; $2 on December 31, 2023; $10 on December 31, 2024; and $8 on December 31, 2025. The service period is 4 years, and the exercise period is 7 years. (a) Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock - appreciation rights plan. (If the compensation decreases from prior year enter the amount as a negative number in the table e.g. - 25,000 or (25,000).) Date Fair Value Cumulative Compensation Recognizable Percentage Accrued Compensation Accrued to Date Expense 2022 Expense 2023 Expense 2024 Expense 2025 12/31/22 12/31/23 12/31/24 12/31/25

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 10MC

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On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
Monona Company reported net income of 29,975 for 2019. During all of 2019, Monona had 1,000 shares of 10%, 100 par, nonconvertible preferred stock outstanding, on which the years dividends had been paid. At the beginning of 2019, the company had 7,000 shares of common stock outstanding. On April 2, 2019, the company issued another 2,000 shares of common stock so that 9,000 common shares were outstanding at the end of 2019. Common dividends of 17,000 had been paid during 2019. At the end of 2019, the market price per share of common stock was 17.50. Required: 1. Compute Mononas basic earnings per share for 2019. 2. Compute the price/earnings ratio for 2019.
The controller of Red Lake Corporation has requested assistance in determining income, basic earnings per share, and diluted earnings per share for presentation on the companys income statement for the year ended September 30, 2020. As currently calculated, Red Lakes net income is 540,000 for fiscal year 2019-2020. Your working papers disclose the following opening balances and transactions in the companys capital stock accounts during the year: 1. Common stock (at October 1, 2019, stated value 10, authorized 300,000 shares; effective December 1, 2019, stated value 5, authorized 600,000 shares): Balance, October 1, 2019issued and outstanding 60,000 shares December 1, 201960,000 shares issued in a 2-for-l stock split December 1, 2019280,000 shares (stated value 5) issued at 39 per share 2. Treasury stockcommon: March 3, 2020purchased 40,000 shares at 38 per share April 1, 2020sold 40,000 shares at 40 per share 3. Noncompensatory stock purchase warrants, Series A (initially, each warrant was exchangeable with 60 for 1 common share; effective December 1, 2019, each warrant became exchangeable for 2 common shares at 30 per share): October 1, 201925,000 warrants issued at 6 each 4. Noncompensatory stock purchase warrants, Series B (each warrant is exchangeable with 40 for 1 common share): April 1, 202020,000 warrants authorized and issued at 10 each 5. First mortgage bonds, 5%, due 2029 (nonconvertible; priced to yield 5% when issued): Balance October 1, 2019authorized, issued, and outstandingthe face value of 1,400,000 6. Convertible debentures, 7%, due 2036 (initially, each 1,000 bond was convertible at any time until maturity into 20 common shares; effective December 1, 2019, the conversion rate became 40 shares for each bond): October 1, 2019authorized and issued at their face value (no premium or discount) of 2,400,000 The following table shows the average market prices for the companys securities during 2019-2020: Adjusted for stock split Required: Prepare a schedule computing: 1. the basic earnings per share 2. the diluted earnings per share that should be presented on Red Lakes income statement for the year ended September 30, 2020 A supporting schedule computing the numbers of shares to be used in these computations should also be prepared. Assume an income tax rate of 30%.
Anoka Company reported the following selected items in the shareholders equity section of its balance sheet on December 31, 2019, and 2020: In addition, it listed the following selected pretax items as a December 31, 2019 and 2020: The preferred shares were outstanding during all of 2019 and 2020; annual dividends were declared and paid in each year. During 2019, 2,000 common shares were sold for cash on October 4. During 2020, a 20% stock dividend was declared and issued in early May. At the end of 2019 and 2020, the common stock was selling for 25.75 and 32.20, respectively. The company is subject to a 30% income tax rate. Required: 1. Prepare the comparative 2019 and 2020 income statements (multiple-step), and the related note that would appear in Anokas 2020 annual report. 2. Next Level Compute the price/earnings ratio for 2020. How does this compare to 2019? Why is it different?
On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.
On December 31, 2021, Skysong Company issues 139,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $11. The fair value of the SARS is estimated to be $5 per SAR on December 31, 2022; $2 on December 31, 2023; $11 on December 31, 2024; and $9 on December 31, 2025. The service period is 4 years, and the exercise period is 7 years. (a) Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan. (If the compensation decreases from prior year enter the amount as a negative number in the table e.g. -25,000 or (25,000).) Date 12/31/22 12/31/23 12/31/24 $ Fair Value 11 Cumulative Compensation Recognizable $ 11 Percentage Accrued % S % %
On December 31, 2021, Swifty Company issues 124,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARS is estimated to be $5 per SAR on December 31, 2022; $2 on December 31, 2023; $10 on December 31, 2024; and $9 on December 31, 2025. The service period is 4 years, and the exercise period is 7 years. (a) Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan. (If the compensation decreases from prior year enter the amount as a negative number in the table e.g.-25,000 or (25,000).) Date Fair Value 12/31/22 $ 12/31/23 12/31/24 12/31/25 Cumulative Compensation Recognizable +A $ Percentage Accrued % % % %
On December 31, 2021, Coronado Company issues 128,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $9. The fair value of the SARS is estimated to be $4 per SAR on December 31, 2022; $1 on December 31, 2023; $9 on December 31, 2024; and $7 on December 31, 2025. The service period is 4 years, and the exercise period is 7 years. (a) Your answer is partially correct. Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan. (If the compensation decreases from prior year enter the amount as a negative number in the table e.g. -25,000 or (25,000).) Date 12/31/22 12/31/23 12/31/24 12/31/25 $ Fair Value 4 ||| Cumulative Compensation Recognizable $ 512,000 128,000 1,152,000 896,000 Percentage Accrued 25 % 50 % 75 % 100 % $ $ Compensation Accrued to Date 128,000 256,000 64,000 -64,000 864,000 -800,000…
On December 31, 2016, Beckford Company issues 150,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARs is estimated to be $4 per SAR on December 31, 2017; $1 on December 31, 2018; $10 on December 31, 2019; and $9 on December 31, 2020. The service period is 4 years, and the exercise period is 7 years. Instructions a. Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan. b. Prepare the entry at December 31, 2020, to record compensation expense, if any, in 2020. c. Prepare the entry on December 31, 2020, assuming that all 150,000 SARs are exercised.
Ferraro, Inc. established a stock-appreciation rights (SARs) program on January 1, 2020, which entitles executives to receive cash at the date of exercise for the difference between the market price of the stock and the pre-established price of $20 on 5,000 SARs. The required service period is 2 years. The fair value of the SARs are determined to be $4 on December 31, 2020, and $9 on December 31, 2021. Compute Ferraro's compensation expense for 2020 and 2021.
On January 1, 2021, the Apex Company exchanged some shares of common stock it had been holding as an investment for a note receivable. The note principal plus interest is due on January 1, 2022. The 2021 income statement reported $2,200 in interest revenue from this note and a $6,000 gain on sale of investment in stock. The stock’s book value was $16,000. The company’s fiscal year ends on December 31.Required:1. What is the note’s effective interest rate?2. Reconstruct the journal entries to record the sale of the stock on January 1, 2021, and the adjusting entry to record interest revenue at the end of 2021. The company records adjusting entries only at year-end.
At December 31, 2019, Wayne Company owned note payable of P1,950,000, due March 15, 2020. Wayne expects to retire this debt with proceeds from the sale of 200,00o shares of its share capital. The shares were sold for P10 per share on March 1, 2020, prior to the issuance of the year-end financial statements. In Wayne's December 31, 2019 Statement of Financial Position, what amount of the note payable should be excluded from current liabilities?