Item 1 of 30Book value per common share represents the amount of shareholders' equity assigned to each outstanding share of common stock.Which one of the following statements about book value per common share is correct?Select the correct response:Book value per common share can be misleading because it is based on historical cost.Market price per common share usually approximates book value per common share.A market price per common share that is greater than book value per common share is an indication of an overvaluedstock.Book value per common share is the amount that would be paid to shareholders if the company were sold to anothercompany.

Common shares the ordinary shares that are being issued by the company, on which dividends needs to…

Answered: Item 1 of 30 Book value per common…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 99.4C

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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
1. Book value per share is ____ oriented while market value per share is ____oriented. * a. short term; long term b. long term; short term c. future; historical d. historical; future 2. When a corporation’s earnings and dividends are exemplary good, which type of preference shares will yield the highest benefit for ordinary shareholders? * a. noncumulative, nonparticipating b. noncumulative, fully participating c. cumulative, nonparticipating d. cumulative, participating e. cumulative, partially participating 3. The book value per share * a. is usually a close approximation of the market price per share. b. is the same as the par value per share. c. may be useful in determining the trend of a shareholders’ per share equity in a corporation. d. always falls within the annual range of a company's market value per share. 4. Which statement is incorrect? * a. Book value per share is the claim of a shareholder in the net assets of the corporation for every share held in the corporation. b.…
#33 In calculating diluted earnings per share, which of the following should not be considered? Group of answer choices The number of ordinary shares resulting from the assumed conversion of debentures outstanding The amount of cash dividends declared on ordinary shares The required annual dividends on cumulative preference shares The weighted average number of ordinary shares outstanding
The book value per share of common stock of Lawrence Company is $10. The company declares and issues a small stock dividend when the market price per share is $7. How would this transaction affect book value per share? Book value per share = Total stockholders' equity/Number of common shares outstanding Select one: a. Cannot be determined from the information provided b. Increase book value per share c. No effect on book value per share d. Decrease book value per share
3. Discuss the accounting treatment, if any, that should be given to each of the following items in computing earnings per share of ordinary shares for financial statement reporting.a) Outstanding preference shares issued at a premium with a par value liquidation right. b) The exercise at a price below market value but above book value of an ordinary share option issued during the current fiscal year to officers of the corporation.c) The replacement of a machine immediately prior to the close of the current fiscal year at a cost 20% above the original cost of the replaced machine. The new machine will perform the same function as the old machine that was sold for its book value. d) The declaration of current dividends on cumulative preference shares.e) The acquisition of some of the corporation's outstanding ordinary shares during the current fiscal year. The shares were classified as treasury shares.f) A 2-for-1 share split of ordinary shares during the current fiscal year.g) A…
3. Which statement is correct?I. Options and warrants are dilutive if the exercise price or option price is lower than the average market price of the ordinary share.II. Earnings per share shall be computed on the basis of average ordinary shares outstanding during the year. 4. Which statement is correct?I. EPS disclosure are required for all public and nonpublic entities.II. PAS 33, requires disclosures on the face of income statement of both basic and diluted earnings per share
Required: Determine the following items based on Eldon's balance sheet. Round all calculations except per-share amounts to the nearest whole number; round per-share amounts to the nearest cent. 4. The par value of the common stock $? per share 7. The total stockholders' equity $? 8. The per-share book value of the common stock assuming that there are no dividends in arrears and that the preferred stock can be redeemed at its par value $? per share
#5 In computing book value per share, which of these directly affect the excess over par column? Group of answer choices Both assumed retirement of treasury shares and assumed issuance of subscribed shares Assumed issuance of subscribed shares Either assumed retirement of treasury shares or assumed issuance of subscribed shares Assumed retirement of treasury shares
The book value per share of common stock of Lawrence Company is $10. 500 Shares of treasury stock are purchased for $14 per share. How would this transaction affect retained earnings and book value per share? Book value per share = Total stockholders' equity/Number of common shares outstanding Select one: a. No effect on retained earnings and decrease book value per share b. Cannot be determined from the information provided c. No effect on retained earnings and increase book value per share d. Decrease retained earnings and increase book value per share e. Decrease retained earnings and decrease book value per share
1. The cost method of accounting for stock investments is used when the company acquires a. Greater than 50% of the company's stock b. Between 20% to 50% of the company's stock c. Less than 20% of the company's stock 2. The significance of percentage of ownership relates to how much _____________ the acquiring company has in the new company. a. data b. control c. confidence
The following are 10 technical accounting terms introduced or emphasized in Chapters 11 and 12:P/e ratio Treasury stock Discontinued operationsStock dividend Extraordinary item Prior period adjustmentBasic earnings per share Additional paid-in capital Diluted earnings per shareComprehensive incomeEach of the following statements may (or may not) describe one of these technical terms. Foreach statement, indicate the term described, or answer “None” if the statement does not correctlydescribe any of the terms.a. A gain or loss that is unusual in nature and not expected to recur in the foreseeable future.b. The asset represented by shares of capital stock that have not yet been issued.c. A distribution of additional shares of stock that reduces retained earnings but causes no changein total stockholders’ equity.d. The amount received when stock is sold in excess of par value.e. An adjustment to the beginning balance of retained earnings to correct an error previouslymade in the…
Which of the following is a correct statement concerning earnings per share? Select one: a. Earnings per share can never be a negative number. b. Earnings per share must be reported for all corporations. c. If a company has discontinued operations, at least two EPS amounts must be reported. d. Reported earnings per share is the result of dividing weighted-average shares by net income. e. None of the above.

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