Exam 15: Contributed Capital

Exhibit 15-9 Groundcover, Inc. had never had a treasury stock transaction prior to 2016. It experienced the following treasury stock transactions during 2016: 4/1/2016: Reacquired 1,000 shares of its own $5 par common stock, originally sold at $12 a share, for $10 a share. This was the first time that Groundcover had reacquired its own stock. 4/8/2016: Reissued 400 shares at $8 a share. 5/2/2016: Reissued 500 shares at $13 a share. 5/10/2016: Retired the remaining 100 shares. Assume the cost method is used. -Refer to Exhibit 15-9. The entry to record the retirement of 100 shares on 5/10/2016 would include a

There are three criteria that must be met in order for a share purchase plan to be considered noncompensatory. If all three criteria are not met then the plan is considered compensatory.

For a stock appreciation rights SAR) compensation plan, the measurement date is the date

Smith Corp. has both Class A and Class B shares of common stock. The difference between the two classes of stock is most likely related to

Which of the following is not part of the shareholders' equity section of the balance sheet?

Which one of the following phrases is least desirable when describing an amount received from a sale of stock in excess of the par value of the stock?

A corporation issues 50 "packages" of securities for $154 per package. Each package consists of three shares of $5 par common stock and one share of $50 par preferred stock. If the market values of $40 per share for the common stock and $100 per share for preferred stock are known, the journal entry to record the sale would assign a total value to the preferred stock of

What is a stock subscription?

Provide the definitions for the following terms: Open corporation Closed corporation Domestic corporation Foreign corporation

Consider each situation for Kathy, Inc. below independently. · Kathy, Inc. issued 10,000 shares of its $25 par common stock current fair value of common is $35 per share) for a large tract of land. The land was appraised at $400,000. Kathy already had 500,000 shares of common stock outstanding. · Kathy, Inc. issued 2,000 shares of $10 par Class A common stock at $12 and 100 shares of no-par Class B common stock at $20. Required: a. At what amount should land be recorded? b. What is the total amount that should be recorded for additional paid-in capital from the second situation?

On January 1, 2016, Robertson Company created a fixed compensatory stock option plan for employees to acquire 18,000 shares of $3 par common stock for $22 a share. The options vest after four years of employment, and therefore, they cannot be exercised until January 1, 2020. On the grant date, the fair value of the options was $5 per option. All options were exercised on June 30, 2020. Robertson Company accounts for this plan using the fair value method. Required: Record all entries relating to this stock option plan over the life of the plan.

Exhibit 15-3 On January 1, 2016, Howard, Inc. granted to a key executive a fixed compensatory share option plan for 1,000 shares of $4 par common stock for $30 a share. The fair value per option on that date was $14. The service period extended through December 31, 2017. -Refer to Exhibit 15-3. What entry, if any, was required on December 31, 2016?

Budget Leasing issued 500 shares of $20 par value convertible preferred stock at $22 per share. Each preferred share is converted to 7 shares of $4 par value common stock. The entry to record this conversion would include a

When callable preferred stock is recalled, if the recall price exceeds the total of the par value in the preferred stock account and the additional paid-in capital associated with the recalled preferred stock, the difference is

When share options are exercised by an employee under a compensatory share option plan, the issuance of the common stock is recorded at the

On January 1, 2016 Howard Corporation issued 1,000 shares of $100 par convertible preferred stock for $125 per share. On January 15, 2018 all shares are converted to common stock. Required: 1) Record the January 1, 2016 issuance of the preferred stock. 2) Record the January 15, 2018 to convert the preferred stock to common based upon the following stated contract information: a.) at a price of $155 per share a.) each share is convertible into 5 shares of $15 par common stock. b.) at a price of $120 per share b.) each share is convertible into 11 shares of $15 par common stock. 3) What if the preferred stock was callable instead of convertible. Prepare the journal entries to recall the stock:

A share option plan will be defined as compensatory if it has which one of the following characteristics?

Which of the following should normally be accounted for under the fair value method?

Exhibit 15-7 On January 1, 2016, 70 executives were granted a performance-based share option plan that would award them each a maximum of 300 shares of $5 par common stock for $12 a share based on the increase in sales over the next three years. The fair value per option on the grant date was $16. The award table is as follows: The company estimates that the sales increase will be 22% and that the annual employee turnover rate will be 2%. -Refer to Exhibit 15-7. In 2017 the actual sales increase was determined to be 18%, and the overall turnover rate was exactly 2%. The compensation expense for 2017 is to the nearest dollar)

Exhibit 15-1 Hanson Co. issued 10,000 shares of its $5 par common stock for $15 a share. In addition, it incurred legal and accounting fees, stock certificate costs, and other related expenses totaling $18,500. -Refer to Exhibit 15-1. Assume the sale was the initial issuance of stock at incorporation for Hanson Co. The entry to record the sale would include a