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ch15.doc-CHAPTER 15 STOCKHOLDERS’ EQUITY IFRS questions
Page 30
Test Bank for Intermediate Accounting, Thirteenth Edition
125.
Farmer Corp. owned 20,000 shares of Eaton Corp. purchased in 2007 for $240,000. On
December 15, 2010, Farmer declared a property dividend of all of its Eaton Corp. shares
on the basis of one share of Eaton for every 10 shares of Farmer common stock held by
its stockholders. The property dividend was distributed on January 15, 2011. On the
declaration date, the aggregate market price of the Eaton shares held by Farmer was
$400,000. The entry to record the declaration of the dividend would include a debit to
Retained Earnings of
a.
$0.
b.
$160,000.
c.
$240,000.
d.
$400,000.
126.
A corporation declared a dividend, a portion of which was liquidating. How would this
distribution affect each of the following?
Additional
Paid-in Capital
Retained Earnings
a.
Decrease
No effect
b.
Decrease
Decrease
c.
No effect
Decrease
d.
No effect
No effect
127.
On May 1, 2010, Ziek Corp. declared and issued a 10% common stock dividend. Prior to
this dividend, Ziek had 100,000 shares of $1 par value common stock issued and
outstanding. The fair value of Ziek 's common stock was $20 per share on May 1, 2010.
As a result of this stock dividend, Ziek's total stockholders' equity
a.
increased by $200,000.
b.
decreased by $200,000.
c.
decreased by $10,000.
d.
did
not
change.
128.
How would the declaration and subsequent issuance of a 10% stock dividend by the
issuer affect each of the following when the market value of the shares exceeds the par
value of the stock?
Additional
Common Stock
Paid-in Capital
a.
No effect
No effect
b.
No effect
Increase
c.
Increase
No effect
d.
Increase
Increase
15 - 30


Page 31
Stockholders’ Equity
129.
On December 31, 2010, the stockholders' equity section of Arndt, Inc., was as follows:
Common stock, par value $10; authorized 30,000 shares;
issued and outstanding 9,000 shares
$
90,000
Additional paid-in capital
116,000
Retained earnings
174,000
Total stockholders' equity
$380,000
On March 31, 2011, Arndt declared a 10% stock dividend, and accordingly 900 additional
shares were issued, when the fair market value of the stock was $18 per share. For the
three months ended March 31, 2011, Arndt sustained a net loss of $32,000. The balance
of Arndt’s retained earnings as of March 31, 2011, should be
a.
$125,800.
b.
$133,000.
c.
$134,800.
d.
$142,000.
*130.
At December 31, 2010 and 2011, Plank Corp. had outstanding 2,000 shares of $100 par
value 8% cumulative preferred stock and 10,000 shares of $10 par value common stock.
At December 31, 2010, dividends in arrears on the preferred stock were $8,000. Cash
dividends declared in 2011 totaled $30,000. What amounts were payable on each class of
stock?
Preferred Stock
Common Stock
a.
$16,000
$14,000
b.
$22,000
$8,000
c.
$24,000
$6,000
d.
$30,000
$0
Multiple Choice Answers—
CPA Adapted
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
120.
d
122.
c
124.
c
126.
b
128.
d
*130.
c
121.
b
123.
b
125.
d
127.
d
129.
a
DERIVATIONS
— Computational
No. Answer
Derivation
71.
a
$4,300,000 + $400,000 + $550,000 + $2,000,000 + $1,500,000 – $150,000
= $8,600,000.
72.
b
$4,300,000 + $550,000 = $4,850,000.
73.
b
(10,000
$25) + (15,000
$20) = $550,000
($250,000 ÷ $550,000)
$480,000 = $218,182.
74.
c
(4,000
$25) + (6,000
$20) = $220,000
($120,000 ÷ $220,000)
$192,000 = $104,727.
75.
d
(5,000
$18) + $100,000 = $190,000.
15 - 31


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