Deck 10 Flashcards Preview

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Flashcards in Deck 10 Deck (20):
1

How are stock options outstanding affected at grant and exercise date?

Increase at grant date and decrease at exercise date

2

JE to declare stock dividend

Debit RE and Credit CS (at par)

3

Are gains/losses from TS recorded in the income statement?

Never!! (gains increase APIC)

4

Book value per common share =

Common stockholders equity/ common shares outstanding

5

Legal capital

Capital that can not be used to pay dividends

6

Preferred stock with a mandatory redemption date is considered a:

Liability

7

Purpose of quasi-reorganization

To eliminate a deficit in RE

8

Normal balance for Treasury stock

Debit (reduces equity)

9

Journal entry to record large stock dividend

Debit RE and credit common stock

10

Small stock dividend declared

Less than 20%; debit RE, Credit C/S and APIC; no effect on equity

11

Large stock dividend

Greater than 25%; Debit RE and credit C/S; no effect on equity

12

Non compensatory stock options

No JE until stock purchased (GAAP only)

13

What are compensatory options valued at?

Fair value of the options issued (grant date)

14

Journal entry for compensation expense

Debit Compensation expense and Credit APIC - stock options; no change in total equity

15

A security will be dilutive when

Dilutive EPS is lower than Basic EPS ( and when it it convertible)

16

Additional number of dilutive shares =

Number of shares - [(# of shares* exercise price)/avg. market price)]

17

Basic EPS =

NI - PD / WACSO

18

Preferred dividends that are noncumulative vs. cumulative:

Noncumulative: use dividends declared, not paid; Cumulative: dividends accumulated, doesn't matter if they have been declared

19

Dilutive securities include:

convertible securities, warrants, options, contracts that may be settled in cash or stock, contingent shares

20

Shares outstanding are always changed based on:

Their weighted averages