Buyback of Shares Retire 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. Treasury Stock : It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement. To journalize: The reacquired shares as treasury stock.

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Answer 1

Question

Chapter 18, Problem 18.16E

(1)

To determine

Buyback of Shares

Retire 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.

Treasury Stock:

It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To journalize: The reacquired shares as treasury stock.

(2)

To determine

To journalize: The reacquired shares as retired shares.

(3)

To determine

To define: The term of buy back will serve “to offset dilution from executive compensation”.

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N4 Refer to the Real Life Case of Chapter 19. Use financial statements (page 51) of Microsoft's 10-K for the fiscal year ended June 30 , 2019 (Source: SEC Edgar). The basic EPS of Microsoft for year 2019 is $5.11 , weighted average shares outstanding is 7,673 million shares, and share price is $134 . If the company had pre-announced and used all funds in its share repurchase program of $40 billion on June 30 , 2019, what would Microsoft's basic EPS have been for fiscal year 2019? a. $3.29 b. $5.06 c. $2.13 d. $5.32 e. $5.11

H3. Consider company Macrosoft, whose current stock price is 542. The board of directorsof Macrosoft has decided to engage a spin-off. Each shareholder of Macrosoft willreceive 3.50232 shares of Coco Colo, whose stock price is 8.34, for each share ofMacrosoft owned. Consider an investor who currently owns 152 shares of Macrosoft.What is the amount of cash that this investor will receive after that spin-off?A) 4436.88B) 2.941C) 4439.821D) 636.781 Please show proper step by step calculation

H2. The current price of a non-dividend paying stock is 172.5. The continuously compounded risk free rate is 0.03. A savvy investor notices a mispriced five-year forward contract to pay 196 in exchange for one share of the stock. In order to exploit this mispricing, the investor shorts a share of the stock now, invests the money gained in the account earning 0.03, and then plans to settle the forward contract in five years. What is the final net earned by the investor?

Answer 2

Question

Chapter 18, Problem 18.16E

(1)

To determine

Buyback of Shares

Retire 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.

Treasury Stock:

It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To journalize: The reacquired shares as treasury stock.

(2)

To determine

To journalize: The reacquired shares as retired shares.

(3)

To determine

To define: The term of buy back will serve “to offset dilution from executive compensation”.

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Answer 3

Question

Chapter 18, Problem 18.16E

(1)

To determine

Buyback of Shares

Retire 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.

Treasury Stock:

It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To journalize: The reacquired shares as treasury stock.

(2)

To determine

To journalize: The reacquired shares as retired shares.

(3)

To determine

To define: The term of buy back will serve “to offset dilution from executive compensation”.

Expert Solution & Answer

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Answer 4

Question

Chapter 18, Problem 18.16E

(1)

To determine

Buyback of Shares

Retire 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.

Treasury Stock:

It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To journalize: The reacquired shares as treasury stock.

(2)

To determine

To journalize: The reacquired shares as retired shares.

(3)

To determine

To define: The term of buy back will serve “to offset dilution from executive compensation”.

Expert Solution & Answer

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Answer 5

Chapter 18, Problem 18.16E

(1)

To determine

Buyback of Shares

Retire 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.

Treasury Stock:

It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To journalize: The reacquired shares as treasury stock.

(2)

To determine

To journalize: The reacquired shares as retired shares.

(3)

To determine

To define: The term of buy back will serve “to offset dilution from executive compensation”.

Answer 6

Chapter 18, Problem 18.16E

(1)

To determine

Buyback of Shares

Retire 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.

Treasury Stock:

It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To journalize: The reacquired shares as treasury stock.

Answer 7

Chapter 18, Problem 18.16E

(1)

To determine

Buyback of Shares

Retire 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.

Treasury Stock:

It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.

To journalize: The reacquired shares as treasury stock.

Answer 8

(2)

To determine

To journalize: The reacquired shares as retired shares.

Answer 9

(2)

To determine

To journalize: The reacquired shares as retired shares.

Answer 10

(3)

To determine

To define: The term of buy back will serve “to offset dilution from executive compensation”.

Answer 11

(3)

To determine

To define: The term of buy back will serve “to offset dilution from executive compensation”.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 18 - Identify and briefly describe the two primary...Ch. 18 - Prob. 18.2Q Ch. 18 - Prob. 18.3Q Ch. 18 - Prob. 18.4Q Ch. 18 - Prob. 18.5Q Ch. 18 - Prob. 18.6Q Ch. 18 - Prob. 18.7Q Ch. 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...

Solution Summary: The author explains how to journalize the reacquired shares as treasury stock.

To journalize: The reacquired shares as retired shares.

To define: The term of buy back will serve “to offset dilution from executive compensation”.

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Chapter 18 Solutions