INTERMEDIATE ACCOUNTING <CUSTOM LL>
10th Edition
ISBN: 9781260887068
Author: SPICELAND
Publisher: MCG CUSTOM
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Question
Chapter 18, Problem 18.9BE
To determine
To determine: The amount by which the paid-in capital increases if it sells 1 million treasury shares at $29 per share (Use FIFO method to determine treasury cost).
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p6
According to M&M Proposition 2, the cost of a firm’s common stock is directly related to
the rating of its common stock in the market.
the number of shares outstanding.
its asset turnover ratio.
its debt-equity ratio.
1. The PowerPoint
Corporation has two classes
of share capital outstanding:
9% (dividend rate), P20 par,
Preference and P70 par,
Ordinary. During the fiscal
year ending December 31,
2012, the company had the
equity transactions in
chronological order as
reflected in the table below.
Dividends were paid at the
end of the fiscal year on the
ordinary share at P1.20 per
share and on the preference
at the preference rate. Profit
for the year was P850,000.
No. of shares
Price per share
Issue of preference share
10,000
P28
Issue of ordinary share
35,000
70
Reacquisition and retirement of preference
2,000
30
Purchase of treasury ordinary share
5,000
80
Share split
2-for-1
Reissue of treasury ordinary share.
5,000
52
Balances of the accounts in the shareholders' equity section of the December 31, 2011 statement of financial
position were:
Preference Share Capital, 50,000 shares
P1,000,000
Ordinary Share Capital, 100,000 shares
7,000,000
Share Premium - Preference
400,000
Share Premium-Ordinary…
Discussion Board #12
What are the primary reasons for a stock split and for treasury stocks?
Chapter 18 Solutions
INTERMEDIATE ACCOUNTING <CUSTOM LL>
Ch. 18 - Identify and briefly describe the two primary...Ch. 18 - Prob. 18.2QCh. 18 - Prob. 18.3QCh. 18 - Prob. 18.4QCh. 18 - Prob. 18.5QCh. 18 - Prob. 18.6QCh. 18 - Prob. 18.7QCh. 18 - What is meant by a shareholders preemptive right?Ch. 18 - Terminology varies in the way companies...Ch. 18 - Most preferred shares are cumulative. Explain what...
Ch. 18 - The par value of shares historically indicated the...Ch. 18 - Prob. 18.12QCh. 18 - How do we report components of comprehensive...Ch. 18 - The balance sheet reports the balances of...Ch. 18 - At times, companies issue their shares for...Ch. 18 - Prob. 18.16QCh. 18 - The costs of legal, promotional, and accounting...Ch. 18 - When a corporation acquires its own shares, those...Ch. 18 - Discuss the conceptual basis for accounting for a...Ch. 18 - The prescribed accounting treatment for stock...Ch. 18 - Brandon Components declares a 2-for-1 stock split....Ch. 18 - What is a reverse stock split? What would be the...Ch. 18 - Suppose you own 80 shares of Facebook common stock...Ch. 18 - Prob. 18.24QCh. 18 - Comprehensive income LO181 Schaeffer Corporation...Ch. 18 - Stock issued LO184 Penne Pharmaceuticals sold 8...Ch. 18 - Prob. 18.3BECh. 18 - Prob. 18.4BECh. 18 - Prob. 18.5BECh. 18 - Retirement of shares LO185 Agee Storage issued 35...Ch. 18 - Treasury stock LO185 The Jennings Group...Ch. 18 - Prob. 18.8BECh. 18 - Prob. 18.9BECh. 18 - Property dividend LO187 Adams Moving and Storage,...Ch. 18 - Stock dividend LO188 On June 13, the board of...Ch. 18 - Prob. 18.14BECh. 18 - Stock split LO188 Refer to the situation...Ch. 18 - Prob. 18.16BECh. 18 - Prob. 18.2ECh. 18 - Earnings or OCI? LO182 Indicate by letter whether...Ch. 18 - Stock issued for cash; Wright Medical Group LO184...Ch. 18 - Issuance of shares; noncash consideration LO184...Ch. 18 - Prob. 18.6ECh. 18 - Share issue costs; issuance LO184 ICOT Industries...Ch. 18 - Prob. 18.14ECh. 18 - Prob. 18.16ECh. 18 - Prob. 18.20ECh. 18 - Prob. 18.22ECh. 18 - Prob. 18.25ECh. 18 - Various stock transactions; correction of journal...Ch. 18 - Prob. 18.1DMPCh. 18 - Prob. 18.6DMPCh. 18 - Prob. 18.8DMP
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Similar questions
- 21. What does IAS 32 provide as regards to the gain from sale of treasury shares? Group of answer choices a. It shall be recognized in profit or loss. b. It shall be credited to share premium. c. It shall be credited to share capital. d. It shall be credited to retained earnings.arrow_forwardQ22 Which of the following statements are correct regarding dividends component in the purchase price of shares? (i) The fair value of a share purchased cum-dividend is the quoted price of the share on the stock market. (ii) The fair value of a share purchased cum-dividend is the quoted price of the share on the stock market less dividend portion in the share price (iii) The fair value of a share purchased ex-dividend is the quoted price on the stock market. (iv) The dividend component has no influence in the accounting treatment of the investment in the shares Select one: a. (ii) and (iii) only b. (i) and (iv) only c. (i), (ii) and (iii) only d. (i), (ii), (iii) and (iv)arrow_forward5. How do you call a stock that investors buy for cash dividends? Growth stock Income stock P/ E PVG Oarrow_forward
- Which of the following methods should be used to account for the conversion of preferred stock to common stock? Book Value Market Value I. Yes No II. Yes Yes III. No Yes IV. No No III IV I IIarrow_forwardA 164.arrow_forwardWhat effect will the acquisition of treasury stock have on a company's earnings per share? (NIE 12) There is not enough information provided to answer this question Decrease No effect Increasearrow_forward
- [17] True or False (Provide explanation). The paid-in capital amount on the balance sheet affects the value of a common stock.arrow_forwardMa4. A company prepares its financial statements according to IFRS its financial statements include ordinary share capital and share premium the company used US gaap what would be likely account titles for these accounts, respectively •Common stock, par value, additional paid-in capital, Share purchase •Common stock additional paid-in capital •Preferred stock additional paid-in capital preferred stock •Common stock, par value, additional paid-in capital stock options 2) what is the term for actuaria gains and losses and how are they accounted for in the IFRS •Actuarial gains and losses accounted for as an OCI item •Remeasurement gains and losses accounted for as an OCI item •Remeasurement gains and losses accounted for as a profit or loss •Actuarial gains and losses accounted for as a profit or lossarrow_forward[18] True or False (Provide explanation). Preferred stock dividends are calculated as a percentage of common stock dividends, although the preferred stock dividend must be paid first.arrow_forward
- q7- Which of the following statements is true? Select one: a. Trailing P/E is based on the current share price and forward P/E is based on next year's forecast share price. b. Trailing P/E is based on last year's share price and forward P/E is based on the current share price. c. Both trailing and forward P/E are based on the current share price. d. Trailing P/E is based on last year's share price and forward P/E is based on next year's forecast share price. Clear my choicearrow_forwardTrue or False, pls explain why 4) A stock buyback transaction will increase the number of treasury shares True Falsearrow_forwardQuestion 3: Define and explain ? preffered stock common stock promissory note Bonds and couponsarrow_forward
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