Exam 14: Corporations: Additional Topics and Ifrs

Discontinued operations use the intraperiod tax allocation method.

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

When calculating earnings per share, the amount of dividends payable to the common shareholders must be deducted from the profit of the company.

On January 1, 2014, Chu Corporation had retained earnings of $422,000. During the year, Chu had the following selected transactions: 1. Declared cash dividends of $100,000. 2. Suffered a loss of $70,000. 3. Corrected understatement of 2013 profit because of an inventory error $45,000. The company has a 30% income tax rate. Instructions Prepare a statement of retained earnings for the year.

Under IFRS, a company has two options of reporting comprehensive income; an all-inclusive format or in a separate statement.

Which of the following describes how comprehensive income should be reported?

On January 1, 2014, the following information appears in the records of Boultin Holdings Inc.: During the year, the company had the following transactions: Mar 31 Declared cash dividends on common shares of $0.50 per share; payable to shareholders of record on April 10, and payable on April 25. Jun 30 Declared the entire annual dividend required on preferred shares; payable to shareholders of record on July 15, and payable on July 31. Sep 15 Declared a 10% stock dividend to shareholders of record on October 5, and distributable on October 15. All dividends were paid or distributed on the due date. Market price of Boultin's common shares at various dates was as follows: At December 31, 2014 the accounting records indicate that Boultin's profit for 2014 was $350,000 and other comprehensive income, consisting of a gain on fair value adjustments on equity investments was $28,000. Instructions a. Journalize the dividend transactions. b. Prepare the statement of changes in shareholders equity for the year ended December 31, 2014. c. Prepare the shareholders' equity section of Boultin's balance sheet at December 31, 2014.

The statement of changes in shareholders' equity discloses changes in total shareholders' equity for the period as well as changes in each shareholder's equity account.

Basic earnings per share and fully diluted earnings per share are calculated for a corporation

On January 1, 2014, Only You Merchandise Ltd. has 5,000 common shared issued for a total of $7,500, and no other shares or contributed capital. During 2014, Only You had the following transactions: Jan 15 Issued 1,500 common shares for $1.50 each. Mar 31 Settled an account for legal expenses by issuing 3,000 shares. The value of the legal services was $5,000. Jun 30 Reacquired 1,700 shares for $2.00 each. Sep 30 Issued 10,000 shares in exchange for equipment with a fair value of $22,500. Instructions a. Record the transactions. b. Calculate the number and average price of common shares issued at the end of 2014.

Saha Company had profit of $1,020,000 for the year ended December 31, 2014. At the beginning of the year, there were 300,000 common shares authorized, and 47,000 shares issued. In addition, during 2014, the company declared a dividend of $7 per share on its 10,000 preferred shares and issued 50,000 common shares on October 1. Instructions Calculate earnings per share for the year ended December 31, 2014.

Under IFRS the following account is included in the shareholders equity section of the balance sheet

At January 1, 2013, Leblanc Corporation had the following shareholders' equity: On March 12, 2013, when the common shares have a market value of $18, the board of directors declared and paid a 10% common stock dividend. On July 31, 2013, the board declared a 2-for-1 stock split on the common shares. During the year, the company paid cash dividends of $80,000 and reported profit of $435,000. -The number of common shares issued at December 31, 2013 is

A stock split will increase the number of shares of a company as will a stock dividend.

Gains or losses, which bypass profit but affect shareholders equity, will be reported in the category of other comprehensive income.

On January 1, 2013, Davin Corporation had $2,000,000 of common shares that were issued at $10 and retained earnings of $1,000,000. The corporation issued 100,000 common shares at $13 per share on July 1. On August 1, 2013, the company declared a $0.50 cash dividend to be paid on August 31, 2013 to shareholders of record on August 15, 2013. On December 15, the board of directors declared a 10% stock dividend to shareholders of record on December 31, 2013, payable on January 15, 2014. The market value of Davin Corporation shares was $15 per share on December 15 and $14 per share on December 31. Profit for 2013 was $500,000. Instructions a. Journalize the entries related to the above transactions. b. Prepare the shareholders' equity section of the balance sheet for Davin Corporation at December 31, 2013. c. Calculate the dividend payout ratio for 2013.

The most common type of dividend is a stock dividend.

The payout ratio would be important to shareholders, whose goal in owning shares is growth in the market price of the share.

Groom Corporation had profit of $415,000 for the year ended December 31, 2014. On January 1, 2014, there were 90,000 common shares issued. Preferred dividends of $70,000 were declared and paid during 2014. Instructions Calculate the earnings per share for Groom Corporation for the year ended December 31, 2014.

Jacobs Corporation has the following shareholders' equity on December 31, 2014: Shareholders' equity -If 10,000 common shares were reacquired for $17 per share, the journal entry to record the transaction would