Exam 15: Contributed Capital

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?

When existing corporations issue stock, costs such as legal fees and underwriter's fees are usually accounted for as

Exhibit 15-7 On January 1, 2013, 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 2014 the actual sales increase was determined to be 18%, and the overall turnover rate was exactly 2%. The compensation expense for 2014 is (to the nearest dollar)

Which one of the following statements is not true with regard to employee compensatory share option plans?

Exhibit 15-3 On January 1, 2014, 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 per option. The service period extended through December 31, 2015. -Refer to Exhibit 15-3. Which balance sheet disclosure would be correct at December 31, 2014?

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

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 occurred after the initial issuance at incorporation. The entry to record the sale and related expenses would include a

What rights is a shareholder of capital stock entitled?

When common stock is issued at an amount greater than par value, the difference between the par value and the proceeds from the sale is recorded by

Required: Compute the ROE for 2013 and 2014 using the DuPont model.

Accumulated other comprehensive income is not reported with shareholder's equity.

If a company has 75,000 shares of treasury stock, 520,000 shares outstanding, and 1,500,000 shares authorized, how many shares are issued?

Given the following information for Jumping Johns Bounce Company: Required: Compute the total amount of contributed capital for Jumping John's Bounce Company.

The intrinsic value method of measuring options based compensation is no longer supported by FASB and the IASB.

Several items appear below. Required: Place an X in front of each item that will appear in the stockholders' equity section of the balance sheet.

Common stock issued to employees through the exercise of stock purchase rights under a stock option plan that is classified as a noncompensatory share purchase plan is recorded by the corporation at the

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

A preemptive right is

What is a stock subscription?