Exam 14: Corporations: Additional Topics and IFRS

The statement of changes in shareholders' equity shows the changes in total shareholders' equity during the year as well as each shareholders' equity account, such as accumulated other comprehensive income.

When a company reacquires shares and the shares are not retired or cancelled, they are referred to as treasury shares.

Fowler Corporation began the year with 50,000 common shares issued. On April 1, Fowler issued 8,000 shares for cash. On July 1, Fowler issued another 6,000 shares for cash. Calculate the weighted average number of shares.

When calculating earnings per share, the current year's dividend declared on preferred shares is subtracted from profit.

The correction of a prior period error that had understated profit last year would:

Discontinued operations are:

On January 1, Pater Corporation had 10,000 preferred shares and 50,000 common shares issued. On April 1, Pater issued 12,000 common shares. The weighted average number of shares for the calculation of earnings per share is:

On March 21, Charlotte Inc. reacquired 2,000 of its common shares at a price of $2.00 per share. The balance in the Common Share account is $200,000 and 90,000 shares are issued.

Companies following ASPE need to prepare a statement of comprehensive income.

What are the overall effects (increase, decrease or no effect) on Assets and Retained Earnings of cash dividends (after they are paid), stock dividends and stock splits?

Cooper Corporation has 100,000 common shares issued at an average price of $20 per share. Cooper reacquires 1,000 shares for $19,500 and cancels them. The journal entry would include:

Stock splits are not recorded in a journal entry.

When a component of an entity is disposed of, the disposal is reported separately on the income statement in the "discontinued operations" section, ignoring the income tax effect.

What are 2 reasons that a corporation may reacquire its own shares?

Dawson Corporation had profit of $120,000. Dawson paid $20,000 in dividends to the preferred shareholders and $40,000 in dividends to the common shareholders. Dawson had 15,000 preferred shares and 50,000 common shares issued all year. Earnings per share is:

On July 1, when there were 220,000 shares issued, Marvo Corporation declared a 5% stock dividend on its common shares. The dividend will be distributed on July 31 to the shareholders of record on July 15. Marvo shares were trading at $18.00 on July 1, $17.50 on July 15, and $17.20 on July 31. Prepare the journal entry necessary for each date.

A statement of changes in shareholders' equity:

A company had 50,000 common shares. During the period, a 10% stock dividend was declared and distributed. The market value was $25 a share. As a result of this stock dividend, retained earnings should increase (decrease) by:

Stock dividends reduce retained earnings and shareholders' equity in total.

The payout ratio is calculated by dividing total cash dividends by profit.