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ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS ques...
ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS questions
ch15.doc-CHAPTER 15 STOCKHOLDERS’ E...
ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS questions
Page 39
Stockholders’ Equity
Solution 15-136
Increase
Decrease
No Effect
1.
Treasury stock is resold at more than cost.
X
2.
Operating loss for the period.
X
3.
Retirement of bonds payable at more than
book value.
X
4.
Declaration of a stock dividend.
X
5.
Acquisition of machinery for common stock.
X
6.
Conversion of bonds payable into common
stock.
X
7.
Not declaring a dividend on cumulative
preferred stock.
X
8.
Declaration of cash dividend.
X
9.
Payment of cash dividend.
X
Ex. 15-137
—Stock dividends.
Describe the journal entry for a stock dividend on common stock (which has a par value).
Solution 15-137
A stock dividend results in the transfer from retained earnings to paid-in capital of an amount
equal to the fair value of each share, if the dividend is less than 20-25%, or par value of each
share, if the dividend is greater than 20-25%. Retained Earnings is debited for the total amount
transferred, Common Stock Dividend Distributable is credited for the total par value of the shares,
and, for a small stock dividend, the excess of market value over par value is credited to Paid-in
Capital in Excess of Par.
15 - 39
Page 40
Test Bank for Intermediate Accounting, Thirteenth Edition
Ex. 15-138
—Stock dividends and stock splits.
Indicate the principal effects of a stock dividend versus a stock split as they affect the issuing
corporation. Respond in the spaces as follows: "C" for change; "NC" for no change.
Stock Dividend
Stock Split
Number of Shares Outstanding
_________
_________
Par Value per Share
_________
_________
Total Par Outstanding
_________
_________
Retained Earnings
_________
_________
Total Stockholders' Equity
_________
_________
Composition of Stockholders' Equity
_________
_________
Solution 15-138
Stock Dividend
Stock Split
Number of Shares Outstanding
C
C
Par Value per Share
NC
C
Total Par Outstanding
C
NC
Retained Earnings
C
NC
Total Stockholders' Equity
NC
NC
Composition of Stockholders' Equity
C
NC
Ex. 15-139
—Computation of selected financial ratios.
The following information pertains to Parsons Co.:
Preferred stock, cumulative:
Par per share
$100
Dividend rate
8%
Shares outstanding
5,000
Dividends in arrears
none
Common stock:
Par per share
$10
Shares issued
60,000
Dividends paid per share
$2.70
Market price per share
$48.00
Additional paid-in capital
$200,000
Unappropriated retained earnings (after closing)
$135,000
Retained earnings appropriated for contingencies
$150,000
Common treasury stock:
Number of shares
5,000
Total cost
$125,000
Net income
$370,000
15 - 40
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