Statement 1: Upon issue of share rights, the issuing corporation records the transaction by a memorandum entry, listing the additional number of shares that may be acquired through the exercise. Statement 2: The expiry of share rights is recorded with a loss on share rights. Only statement 1 is correct Only statement 2 is correct Both statements are correct Both statements are incorrect

Statement 1: Upon issue of share rights, the issuing corporation records the transaction by a memorandum entry, listing the additional number of shares that may be acquired through the exercise. Statement 2: The expiry of share rights is recorded with a loss on share rights. Only statement 1 is correct Only statement 2 is correct Both statements are correct Both statements are incorrect

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter18: Corporations: Organization And Capital Structure

Section: Chapter Questions

Problem 11DQ

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Statement 1: Upon issue of share rights, the issuing corporation records the transaction by preparing a journal entry to recognize the additional number of shares that may be acquired through the exercise.Statement 2: When preference shares are issued with detachable warrants, the proceeds should be allocated between the preference shares and the warrants based on the fair values of the two securities at the time of issuance. a) Both statements are true. b) Both statements are false. c) Statement I is true; Statement II is false. d) Statement I is false; Statement II is true.
Transaction costs incurred by the corporation relating to issue of shares may not be a. Charged against the related share premium b. Charged to an expense account c. Written off directly against share capital d. Taken to profit or loss
1. Shares issued in connection with business combination are recorded at: A discount A premium Fair value Par value 2. Indirect costs related to acquisition of another entity is treated as An expense An investment account Share capital Share premium 3. The cost of registering equity securities in a business combination should be capitalized debited to share premium expensed
Which statement is incorrect regarding equity-settled share-based payment transactions? A. the issuance of shares to employees with say, a two year vesting period is considered to relate to services over the vesting period. B. the issuance of shares or rights to shares requires an increase in a component of equity C. the fair value of a share-based payment transaction is determined at the date of exercise. D. the issuance of fully vested shares, or rights to shares, is presumed to relate to past service, requiring the full amount of the grant-date fair value to be expensed immediately. Provided the specified vesting conditions, if any, are met, share-based payment arrangement is an agreement between the entity and another party that entities the other party to receive A. equity instruments of the entity or another group entity B. none of the choices C. receives goods or services from the supplier of those goods or services in a…
Which of the following statements is correct regarding working paper entries to facilitate the preparation of the consolidated financial statements? * A. Debit Non-controlling Interest in Net Assets in the working paper to assign to the non-controlling stockholders their share in the gain on bargain purchase. b. Debit Share Premium relating to issuance of stocks in the working paper to record the cost of SEC registration and listing fees. c. Credit Investment in Subsidiary Company Stock in the working paper to record the purchase of outstanding shares from subsidiary company. d. Credit Equipment in the working paper to adjust a fair value differential of an overvalued equipment.
Matching Type. Choose the correct answer in the box provided. These are distributions of the earnings of the corporation in the form of the corporation's own shares. * It is the procedure of restating assets, liabilities and share capital balances at its fair value for the purpose of eliminating deficit. * Share option is the best example of this kind of share-based compensation plan. * The date the liability for dividends must be recognized *
1. The par value of ordinary share represents •The liquidation value of the share •The book value of the share •The legal nominal value assigned to the share •The amount received by the entity when the share was originally issued 2. An advantage of a corporation is •ease of formation •limited liability •regulation •double taxation
1.) When share options issued to employees are exercised, the entity shall: a. recognize a loss for the unamortized balance b. make a transfer among equity components c. recognize a gain for the unamortized balance d. do nothing 2.) A share-based payment transaction with cash alternative whereby the right of choice of settlement is retained by the entity is accounted for as: a. either cash-settled or equity-settled, but not both b. equity-settled c. partly cash-settled and equity-settled d. cash-settled 3.) A share-based payment transaction with cash alternative whereby the right of choice of settlement is given to the employee is accounted for as: a. cash-settled b. either cash-settled or equity-settled, but not both c. partly cash-settled and equity-settled d. equity-settled
When share options issued to employees are vested prior to the predetermined vesting date, the entity shall A.do nothing B.make a transfer among equity components C.recognize additional expense for the unamortized balance D. recognize a gain for the unamortized balance
Which of the following statements correctly relate to ordinary shares? i) They represent an ownership interest.ii) Ordinary equity holders are the first to have their claims met in the event of the company going into administration.iii) As dividends are the return to the shareholders, they are paid out of operating profits before tax.iv) Control rights often differ between ordinary and other classes of share.
Which of the following items is not presented under the equity section of the statement of financial position? Share options outstanding Share warrants outstanding Share appreciation rights payable Share dividend payable/distributable
A company issued rights to its existing shareholders to purchase ordinary shares. When the rights are exercised, share premium would be credited if the par value was the same as the purchase price but less than the fair value at the date of exercise exceeded the purchase price was less than the purchase price was the same as the purchase price