Exam 15: Contributed Capital

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

Treasury stock does not vote, has no preemptive rights, cannot participate in dividends, and has no liquidation rights.

U.S. GAAP and IFRS utilize similar accounting for shareholders' equity but there are some differences. Required: Explain the differences between U.S. GAAP and IFRS in their accounting for shareholders' equity.

Exhibit 15-5 On January 1, 2013, Roberts Company adopts a compensatory share option plan and grants 40 executives 1,000 shares each at $30 a share. The fair value per option is $7 on the grant date. The company estimates that its annual employee turnover rate during the service period of three years will be 4%. -Refer to Exhibit 15-5. At the end of 2014, the company estimates that the employee turnover will be 5% a year for the entire service period. The compensation expense for 2014 will be (Round off turnover calculations to three decimal places and answer to the nearest dollar.)

Which of the following can be accounted for under the intrinsic value method?

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

The accounting method that is used for share appreciation rights (SARs) compensation plans is similar to the accounting procedures that can be used for

How will stockholders' equity and net income be affected by the issuance of stock purchase rights to employees under a noncompensatory share purchase plan?

Exhibit 15-8 On January 1, 2013, Margarita Company granted share appreciation rights (SARs) to the president, which permitted her to receive cash or stock for the difference between the quoted market price and $50 for 2,000 shares of the company's stock on the exercise date. The service period ends on December 31, 2015, and the rights must be exercised by December 31, 2018. Assume that on December 31, 2016, the president exercises all of her rights and receives cash. Using an options pricing model, the estimated fair values of the SARs were as follows: -Refer to Exhibit 15-8. What is the compensation expense related to the SARs for the year ending December 31, 2016?

Exhibit 15-6 On January 1, 2014, 50 executives were given a performance-based share option plan that would award them with a maximum of 300 shares of $10 par common stock for $20 a share. On the grant date, the fair value of an option was $16.50. The number of options that will vest depends on the size of the annual average increase in sales over the next three years according to the following table: On the grant date, the company estimates the annual average sales increase will be 14%. -Refer to Exhibit 15-6. In 2015, the company determined that the actual annual average increase was 16%. The compensation expense for 2015 will be

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

There is disagreement among accountants as to how subscriptions receivable should be reported on the balance sheet. Required: Describe three different ways in which subscriptions receivable can be reflected on the balance sheet and provide a justification for each alternative.

Exhibit 15-9 Groundcover, Inc. had never had a treasury stock transaction prior to 2013. It experienced the following treasury stock transactions during 2013: Assume the cost method is used. -Refer to Exhibit 15-9. The entry to record the reissuance of 400 shares on 4/8/2013 would include a

What are share based compensation plans?

Which of the following types of corporations is owned or operated by a government unit?

On January 1, 2013, 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, 2017 On the grant date, the fair value of the options was $5 per option. All options were exercised on June 30, 2017. 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.

In the financial statements, dividends in arrears on cumulative preferred stock should be

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 noncompensatory share purchase plan is designed to

A partial listing of accounts and ending balances for Carver, Inc., on December 31, 2014, is shown below: Following is additional information relative to the above accounts: Following is additional information relative to the above accounts: •The preferred stock is 8% cumulative with par value of $50. For the preferred stock, 10,000 shares have been authorized, 6,000 shares are issued and outstanding, and 1,000 shares have been subscribed at a price of $65 per share. Each share of preferred stock is convertible into four shares of common. •Bonds payable mature on September 30, 2018. They have a stated interest rate of 10%, payable semiannually. The straight-line method is used to amortize the premium. •Common stock has a par value of $4 per share. For the common stock, 60,000 shares have been authorized, 45,000 shares are issued and outstanding, and 5,000 shares have been subscribed at $32 per share. Required: Prepare the contributed capital section of the December 31, 2014 balance sheet for Carver, Inc. Include appropriate parenthetical notes for the common and preferred stock.