Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 18, Problem 18.14E
(1)
To determine
Retired stock:
Buy back of shares from the shareholders by paying cash and obtaining the status of “authorized but unissued shares” is known as retired shares.
To identify: The method of accounting for reacquired shares for the two different presented shareholders’ equity report.
(2)
To determine
To explain: The cause for the difference in the some account balances and in the presentation format.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Question Content Area
Exercise 7-18 (LO. 2)
On August 27 of the current year, Bailey Corporation exchanged $25,000 of 4% interest-bearing bonds for 100 shares of its common stock worth $300 per share.
If your answer amount is zero, enter "0".
a. Does this transaction qualify as a nontaxable reorganization? If so, what is its type?
b. What is the gain realized by the bondholders on the exchange?$fill in the blank 2
c. What is the gain recognized by the bondholders on the exchange?$fill in the blank 3
d. What is the basis in the stock that was received?$fill in the blank 4
12.
When a company retires its own common shares, the company must
a.decrease the common share account balances by the original issue price.
b.record a gain or loss depending on the difference between original selling price and repurchase cost.
c.get the approval of the government to do so.
d.issue a different class of shares to the former shareholders.
Exercise 4 – 6On January 1, 2020, Blunt Co. purchased 50,000 ordinary shares of Powter Co. at ₱16 per share. The shares are classified as financial asset at fair value through other comprehensive income. Powter declared and paid dividends of ₱4 and ₱5 per share in 2020 and 2021, respectively. At the end of 2020 and 2021, Powter’s shares were trading at ₱17 and ₱14, respectively.1. Determine the dividend income recognized by Blunt on the equity instrument in 2020 and 2021.2. Determine the carrying amount of the equity instrument on Blunt’s statement of financial statement on December 31, 2020 and December 31, 2021.3. Determine the unrealized gain or loss on change in fair value recognized by Blunt in its profit or loss statement for the year ended December 31, 2020 and December 31, 2021.4. Determine the cumulative balance of the unrealized gain or loss recognized in the other comprehensive income of Blunt’s shareholders’ equity on December 31, 2020 and December 31, 2021.
Chapter 18 Solutions
Intermediate Accounting
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 - Cash dividend LO188 Real World Financials...Ch. 18 - Effect of preferred stock on dividends LO187 The...Ch. 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 - Comprehensive income LO182 The following is from...Ch. 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 - Reporting preferred shares LO184, LO187 Ozark...Ch. 18 - Prob. 18.9ECh. 18 - Prob. 18.10ECh. 18 - Retirement of shares LO185 In 2018, Borland...Ch. 18 - Treasury stock LO185 In 2018, Western Transport...Ch. 18 - Treasury stock; weighted-average and FIFO cost ...Ch. 18 - Prob. 18.14ECh. 18 - Prob. 18.15ECh. 18 - Prob. 18.16ECh. 18 - Transact ions affecting retained earnings LO186,...Ch. 18 - Effect of cumulative, nonparticipating preferred...Ch. 18 - Stock dividend LO188 The shareholders equity of...Ch. 18 - Prob. 18.20ECh. 18 - Cash in lieu of fractional share rights LO188...Ch. 18 - Prob. 18.22ECh. 18 - Transact ions affecting retained earnings LO186...Ch. 18 - Profitability ratio LO181 Comparative balance...Ch. 18 - Prob. 18.25ECh. 18 - Various stock transactions; correction of journal...Ch. 18 - Share buybackcomparison of retirement and treasury...Ch. 18 - Reacquired sharescomparison of retired shares and...Ch. 18 - Prob. 18.4PCh. 18 - Shareholders equity transactions; statement of...Ch. 18 - Prob. 18.6PCh. 18 - Prob. 18.7PCh. 18 - Prob. 18.8PCh. 18 - Effect o f preferred stock characteristics on...Ch. 18 - Prob. 18.10PCh. 18 - Stock dividends received on investments;...Ch. 18 - Various shareholders equity topics; comprehensive ...Ch. 18 - Prob. 18.13PCh. 18 - Prob. 18.1BYPCh. 18 - Prob. 18.2BYPCh. 18 - Research Case 184 FASB codification; comprehensive...Ch. 18 - Judgment Case 185 Treasury stock; stock split;...Ch. 18 - Prob. 18.6BYPCh. 18 - Prob. 18.7BYPCh. 18 - Prob. 18.8BYPCh. 18 - Prob. 1CCTC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- nEED IN 10 MINUTES 9. On January 1, 20x1, an entity purchased marketable equity securities for P2,500,000. The entity paid commission and taxes of P190,000. The equity securities do not qualify as financial asset held for trading. The entity made irrevocable election to present unrealized gain and loss in other comprehensive income. The securities have a market value of P2,600,000, and P2,750,000 on December 31, 20x1 and December 31, 20x2. On July 1, 2022, half of the securities are sold for P1,400,000. On July 1, 2022, the net increase/ decrease in retained earnings account is (sample answer: 10,500 increase or 10,500 decrease)arrow_forwardQUESTION 3.5 Tusker Corporation is considering a 3- for- 2 share split. It currently has the shareholder’s equity position shown. The current share price is R120 per share. The most recent periods earnings available for ordinary shares are included in retained earnings. Preference shares R1 000 000Ordinary shares (100 000 shares at R3 R300 000per shareShare premium R1 700 000Retained earnings R10 000 000Total shareholders’ equity R13 000 000 Explain the differences between share splits and dividends.arrow_forward551. CHAPTER 6âCORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 66 Pursuant to a qualifying stock redemption, Redbird Corporation (E & P of $400,000) transfers land held for investment purposes to Bob, a 10% shareholder. On the date of the distribution, Redbird has a basis of $200,000 in the land and its fair market value is $150,000. Bob has a basis of $40,000 in the shares redeemed. With respect to the redemption: a. Bob will recognize a gain of $110,000. b. Bob will have $150,000 of dividend income. c. Bob will have a $200,000 basis in the land. d. Redbird Corporation will recognize a capital loss of $50,000. e. None of the above. 552. CHAPTER 6âCORPORATIONS: REDEMPTIONS AND LIQUIDATIONS Question 67 Canary Corporation has 1,000 shares of stock outstanding. It redeems in a qualifying stock redemption 350 shares for $400,000 at a time when it has paid-in capital of $100,000 and E & P of $1 million. What would be the charge to…arrow_forward
- PROBLEM 31Cobarrubias Corporation had the following investment at FVTPL at the beginning of the current year: Fair ValueABC Corporation, 10,000 shares (originally cost P1,000,000) - P1,200,000JKL Company, 20,000 shares (originally cost P500,000) - 450,000 During the current year, the following transactions occurred: Feb. 28 ABC Corporation declared a 3-for-2 share split. Apr 31 JKL Company declared a 20% share dividend. The market value of JKL Company on this date is P3.00. June 30 Sold 5,000 shares of JKL Company for P100,000, less brokers fee of P1,000. July 31 Sold 5,000 shares of ABC Corporation for P135. Sept 30 Received share rights to purchase one share of ABC Corporation for P100 per share. The company should tender five rights for every share acquired. The market price of ABC Corporation shares on this date is P140. Oct. 31 Exercise all the share rights from ABC…arrow_forwardExercise 18-5 (Algo) Issuance of shares; noncash consideration [LO18-4] During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders’ equity. The articles of incorporation authorized the issue of 9 million common shares, $1 par per share, and 2 million preferred shares, $50 par per share. 1-February 12 Sold 4 million common shares, for $10 per share. 2-February 13 Issued 44,000 common shares to attorneys in exchange for legal services. 3-February 13 Sold 80,000 of its common shares and 3,000 preferred shares for a total of $980,000. 4-November 15 Issued 365,000 of its common shares in exchange for equipment for which the cash price was known to be $3,768,000. Required: Prepare the appropriate journal entries to record each transaction. Note: If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Corporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Corporate Financial Accounting
Accounting
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning