10. Which of the following statements is correct concerning legal capital? Group of answer choices a. In the case of par value share, the legal capital is the aggregate par value of the shares issued and subscribed. b. In the case of no-par value share, the legal capital is the total consideration received from shareholders including the excess over the stated value. c. Both a and b d. Neither a nor b

10. Which of the following statements is correct concerning legal capital? Group of answer choices a. In the case of par value share, the legal capital is the aggregate par value of the shares issued and subscribed. b. In the case of no-par value share, the legal capital is the total consideration received from shareholders including the excess over the stated value. c. Both a and b d. Neither a nor b

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 14MC: Which of the following is true of a stock dividend? A. It is a liability. B. The decision to issue a...

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7. If share capital is issued for tangible or intangible property, the value of share capital is equal to the following value in order of priority a) Fair market value of the priority received b) Fair market value of the capital issued c) Par value of the share capital d) All of the above priority 8. Share Premium account is recorded as a credit when- a) Shares are sold higher than par value b) Shares are sold less than the par value c) Shares are sold at par value d) All of these
2. The following are the common sources of share premium, except Group of answer choices a. Excess over par or stated value b. Donated capital c. Revaluation surplus d. Issuance of share warrants
14. When the equity shares are issued for noncash consideration, the share capital is recorded at an amount equal to the following in which order of priority Group of answer choices a. Fair value of shares issued – Fair value of the noncash consideration received – Par value of the shares issued. b. Fair value of noncash consideration received – Fair value of shares issued – Par value of the shares issued. c. Par value of the shares issued – Fair value of noncash consideration received – Fair value of shares issued. d. Fair value of shares issued – Par value of shares issued – Fair value of noncash consideration received.
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.
Answer the following questions correctly. 1.Explain the accounting for the issuance of: a. Par value share b. No-par value share 2. Explain the accounting for share capital issued for noncash considerations
S1: The conversion of preference share capital into ordinary share capital increases the total shareholders' equity. S2: The Donated Capital account is shown as part of share premium of the reserves section of the shareholders' equity. a. Only S1 is correct b. Only S2 is correct c. Both statements are correct d. Both statements are incorrect.
Which of the following statements is true in relation to the call price of preference shares? The call price is used in computing book value per share. In the absence of call price, the liquidation value is disregarded and the par or stated value is instead used. The call price is the amount paid to preference shareholders upon redemption of preference shares during the lifetime of the entity. All of these statements are true.
1. What is the accounting for treasury share transactions? a. Treasury shares are accounted for as financial assets. b. On repurchase or re-issuance of previously purchased own shares, no gain or loss is recognized. c. On re-issuance of treasury shares, a gain or loss is recognized equal to the difference between the previous repurchase price and the re-issuance price. d. On repurchase of treasury shares, a gain or loss is recognized equal to the difference between the amount at which the shares were issued and the repurchase price for the shares.
18. Which of the following differs in GAAP and IFRS? Calculation of EPS Model for recognizing stock-based compensation Accounting for convertible debt Modification of a share option
7. If treasury shares are subsequently retired and the cost of the treasury shares exceeds the par value, the difference is charged Group of answer choices a. first, Share premium from the original issuance and then Retained Earnings. b. first to share premium from original issuance and then share premium from treasury shares of the same class. c. first to share premium from original issuance, and then share premium from treasury shares of the same class and then to retained earnings. d. first to share premium from treasury shares of the same class and then the balance to retained earnings.
5. For cash-settled share based payment transactions, until the liability is settled, the entity is required to re-measure the fair value of the liability at each reporting date and at the date of settlement and any changes in fair values are: Treated as a component of equity Included in accumulated profits Not recognized Included in earnings 6. In computing Earnings per share when there are preference shares, the total net income after tax is reduced by the dividend in arrears of cumulative preference shares. TRUE FALSE 7. Basic earnings per share will serve as a guide to investors as to the attractiveness of ordinary shares as an investment. TRUE FALSE 8. Book value per share is computed by dividing the net assets to the total number of shares outstanding. TRUE FALSE
What is reflected in the additional paid-in capital account?Required to answer. Single choice. a. Whichever is higher of (1) the difference between the market price and the par value when the stock was issued and (2) the difference between the market price and the par value when the stock was reacquired b. Whichever is lower of (1) the difference between the market price and the par value when the stock was issued and (2) the difference between the market price and the par value when the stock was reacquired c. The difference between the market price and the par value when the stock was reacquired d. None of the above e. The difference between the market price and the par value when the stock was issued.