On Long-term Debt, Equity and Capital Structure * Statement I: Participating preferred stock means that preferred shareholders will participate with common shareholders in any excess dividends. Statement II: Shares that have been sold to the public are called issued shares. exclusion. Statement III: The preemptive right allows a stockholder to purchase new shares of stock before they are sold to the general public.

On Long-term Debt, Equity and Capital Structure * Statement I: Participating preferred stock means that preferred shareholders will participate with common shareholders in any excess dividends. Statement II: Shares that have been sold to the public are called issued shares. exclusion. Statement III: The preemptive right allows a stockholder to purchase new shares of stock before they are sold to the general public.

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

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 10C: Treasury Stock For numerous reasons, a corporation may reacquire shares of its own capital stock....

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Treasury Stock A corporation sometimes engages in treasury stock transactions. Required: 1. Define treasury stock. 2. Why would a corporation acquire treasury stock? 3. Briefly explain the cost method of accounting for the requisition and reissuance of treasury stock. Assume the treasury stock is common stock and has a par value. 4. Briefly explain the balance sheet presentation of treasury stock under this method.
Capital Stock Capital stock is an important area of a corporations equity section. Generally the term capital stock embraces common and preferred stock issued by a corporation. Required: 1. What are the basic rights inherent in ownership of common stock, and how are they exercised? 2. What is preferred stock? Discuss the various preferences afforded preferred stock.
Par value of a stock refers to the ________. A. issue price of a stock B. value assigned by the incorporation documents C. maximum selling price of a stock D. dividend to be paid by the corporation
The total amount of cash and other assets received by a corporation from the stockholders in exchange for the shares is ________. A. always equal to par value B. referred to as retained earnings C. always below its stated value D. referred to as paid-in capital
Authorized stock represents the: number of shares that are currently held by stockholders. number of shares that have been sold. number of shares that have been repurchased by the corporation. maximum number of shares that can be issued.
Which of the following statements is true? The outstanding number of shares is the maximum number of shares that can be issued by a corporation. The shares that are in the hands of the stockholders are said to be outstanding. It is very unlikely that corporations will have more than one class of stock outstanding. Preferred stock is stock that has been retired.
In what way is a preferred stock usually more similar to a bond than to a common stock? O a. Preferred stockholders are more risky than common stocks O b. Preferred stockholders elect the board of directors of the organization O c. Preferred bondholders participate in the growth of the company through increases in dividends and stock prices O d. Preferred stockholders are typical entitled fixed payments O e. If the company were to go into liquidation, preferred stockholders will be entitled to payments after common stockholders are paid-off
1. The issuer of an ordinary share dividend to ordinary shareholders should transfer from retained earnings to contributed capital an amount equal to the a. fair value of the shares issued. b. par or stated value of the shares issued. c. book value of the shares issued. d. minimum legal requirements. 2. Statement 1: Treasury shares are a company’s own shares that have been reacquired and retired. Statement 2: The cost method records all transactions in treasury shares at their cost and reports the treasury shares as a deduction from ordinary shares. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect. 3. The declaration and issuance of a share dividend a. increases ordinary shares outstanding and increases total equity. b. increases retained earnings and increases total equity. c. decreases retained earnings but does not change total equity. d. may increase share premium but does not change total…
Match each of the following terms with the correct definition: additional paid-in capital issued and outstanding retained earnings treasury stock authorized share capital par value Correct Definitions: The price at which each share is recorded in the company’s books Held by investors Cumulative amount of profits that have been plowed back The difference between the amount of cash raised by an equity issue and the par value of the issue The maximum number of shares that can be issued without shareholder approval The amount that the company has spent buying back stock that it has not subsequently resold
1. What is the accounting for treasury share transactions? a. On repurchase or re-issuance of previously purchased own shares, no gain or loss is recognized. b. Treasury shares are accounted for as financial assets. 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. . 2. If a no-par value share is issued... a. The value of each share is automatically ₱5. b. The corporation is automatically in violation of its state charter. c. There is no legal capital. d. The entire proceeds is considered as legal capital. . 3 Which of the following statements relating to bonds is incorrect? a. None of the choices b. A bond’s face value is the amount the issuer must pay…
Match each of the following terms with the correct definition: a. additional paid-in capitalb. issued and outstandingc. retained earningsd. treasury stocke. authorized share capitalf. par value Correct Definitions:A. The price at which each share is recorded in the company’s booksB. Held by investorsC. Cumulative amount of profits that have been plowed backD. The difference between the amount of cash raised by an equity issue and the par value of the issueE. The maximum number of shares that can be issued without shareholder approvalF. The amount that the company has spent buying back stock that it has not subsequently resold
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.