Exam 14: Corporations: Additional Topics and Ifrs

Which of the following statements concerning a change in accounting policy is true?

The entry to record the reacquisition of common shares at a cost lower than the average issue cost requires a

The following accounts appear in the ledger of Niagra Inc. after the books are closed at December 31, 2014: Instructions Prepare the shareholders' equity section of the balance sheet at December 31, 2014.

At July 1, 2013, Peters Corporation had the following share capital: *The preferred dividends are 2 years in arrears. On January 1, 2014, the board of directors declared and paid a 15% common stock dividend when the market price of common shares was $23.50. On April 1, 2014, the company sold an additional 1,000,000 common shares for proceeds of $5,680,000. The corporation earned $722,000 during the year and paid $186,000 in dividends. Instructions a.. Calculate Peters Corporation's earnings per share for the year ended June 30, 2014, assuming the company paid $186,000 in cash dividends. b. Calculate Peters Corporation's earnings per share for the year ended June 30, 2014, assuming the company paid $186,000 in cash dividends but there were no preferred dividends in arrears. c. Calculate Peters Corporation's earnings per share for the year ended June 30, 2014, assuming the preferred dividends are noncumulative and $50,000 in total cash dividends were paid during the year.

Only common shares are able to be split.

When shares are reacquired at a price below average cost, Retained Earnings will be debited.

When a company repurchases its shares but does NOT retire them, these shares would said to be

The effects of a share split and a stock dividend are the same on the cash position of the company.

The effect of a stock dividend is to

Holiday Travel Corporation's shareholders' equity section at December 31, 2013 appears below: Shareholders' equity On June 30, 2014, the board of directors of Holiday Travel Corporation declared a 10% stock dividend, payable on July 31, 2014, to shareholders of record on July 15, 2014. The fair market value of Holiday Travel Corporation's shares on June 30, 2014, was $12 per share. On December 1, 2014, the board of directors declared a 2-for-1 stock split effective December 15, 2014. Holiday Travel Corporation's shares were selling for $16 on December 1, 2014, before the stock split was declared. Profit for 2014 was $225,000 and there were no cash dividends declared. Instructions a. Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split. b. Fill in the amount that would appear in the shareholders' equity section for Holiday Travel Corporation at December 31, 2014, for the following items:

The reacquisition of common shares for a price lower than the average cost will result in a credit to "gain on the purchase of common shares."

For the year ended December 31, 2014, Black Corporation reported the following information: Instructions Prepare the statement of comprehensive income for the year ended December 31, 2014 starting with profit. The company records gains and losses on its equity investments as other comprehensive income and has a 25% income tax rate.

The following information is available for a fictitious Canadian public corporation: Instructions For each of the three years, calculate the earnings per share, the price earnings ratio, and the common share dividend payout ratio.

All of the following statements about changes in accounting policy are correct EXCEPT

The payout ratio is the cash dividends divided by the profit, expressed as a percentage.

If a company starts using a new accounting method because of a change in circumstances; this is considered a change in accounting policy under IFRS.

Under IFRS which of the following is NOT a choice for the Statement of Comprehensive Income?

The acquisition of a company's own shares, by a corporation, increases total assets and shareholders' equity.

Which of the following statements apply to discontinued operations? 1) The operations and cash flows have been (or will be) eliminated from the ongoing operations of the company as a result of the disposal transaction. 2) The company must report the profit (loss) and gain (loss) on discontinued operations net of the applicable taxes. 3) Assets (net of any related liabilities) that are held for sale as discontinued operations are valued and reported on the balance sheet at the lower of their carrying amount and fair value (less any anticipated costs of selling).

During 2014, the following independent events occurred at Sarajavo Corporation on the dates indicated: 1. Sales were understated by $145,000 for 2013. This error was discovered on January 20, 2014, when trying to reconcile the accounts receivable balance. 2. On March 31, 2014, Sarajavo Corporation discovered that Depreciation Expense on factory equipment for the year ended December 31, 2013, had been recorded twice, for a total amount of $60,000 instead of the correct amount of $30,000. 3. On June 30, 2014, Sarajavo Corporation discovers that its 2013 cost of goods sold was overstated by $14,500 as a result in counting inventory. Assume Sarajavo has a 20% income tax rate. Instructions Prepare any journal entries required as a result of the information provided.