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Exam 19: Share-Based Compensation and Earnings Per Share

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Question 41

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In order to encourage employee ownership of the company's $1 par common shares,T Corp.permits any of its employees to buy shares directly from the company through payroll deduction.There are no brokerage fees and shares can be purchased at a 15% discount.During June,employees purchased 150,000 shares at a time when the market price of the shares on the New York Stock Exchange was $10 per share. Required: Prepare the appropriate journal entry to record the June purchases of shares under the employee share purchase plan.

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Question 42

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the most correct term.

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Question 43

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What is Falwell's diluted earnings per share for 2016,rounded to the nearest cent?

The following information pertains to J Company's outstanding stock for 2016: What is the number of shares J should use to calculate 2016 basic earnings per share?

Which is the correct entry to record compensation expense for the year 2016?

All other things equal,what is the effect on earnings per share when a corporation acquires shares of its own stock on the open market?

Which of the following results in increasing basic earnings per share?

When the income statement includes discontinued operations,which amounts require per share presentation?

Nonconvertible bonds affect the calculation of:

Stock options,rights,and warrants are different from convertible securities in that they:

Under its executive stock option plan,W Corporation granted options on January 1,2016,that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years,but not before December 31,2018 (the vesting date) .The exercise price is the market price of the shares on the date of grant,$18 per share.The fair value of the options,estimated by an appropriate option pricing model,is $4 per option.No forfeitures are anticipated.The options are exercised on April 2,2019,when the market price is $21 per share.By what amount will W's shareholder's equity be increased when the options are exercised?

When we take into account the dilutive effect of stock options,rights,and warrants in the calculation of EPS,the method used is called the:

Parsley Corporation had 250,000 shares of common stock and 5,000 shares of 8%,$100 par,preferred stock outstanding on December 31,2015.The preferred stock is cumulative,nonconvertible preferred stock.On June 1,2016,Parsley sold 36,000 shares of common stock for cash.No cash dividends were declared for 2016.Parsley reported a net loss of $320,000 for the year ended December 31,2013. Required: Calculate Parsley's loss per share (rounded to 2 decimal places)for the year ended December 31,2016.

Compensation expense must be adjusted during the service period to reflect changes in the fair value of options caused by changes in the market price of the underlying shares.

The single accounting number in the annual report that receives the most attention by investors is:

A simple capital structure might include:

Which of the following does not represent potential shares?

Hammerstein Corporation offers a variety of share-based compensation plans to employees.Under its restricted stock award plan,the company,on January 1,2016,granted 2 million of its $1 par common shares to various division managers.The shares are subject to forfeiture if employment is terminated within four years.The common shares have a market price of $20 per share on the award date. Required: (1. )Determine the total compensation cost from these restricted shares. (2. )Prepare the appropriate journal entry to record the award on January 1,2016. (3. )Prepare the appropriate journal entry to record compensation expense on December 31,2016. (4. )Suppose a 15% forfeiture rate was expected prior to vesting.Determine the total compensation cost,assuming the company follows the fair value approach and chooses to anticipate forfeitures at the grant date.

The reporting of earnings per share is required only for:

Dublin Inc.had the following common stock record during the current calendar year: A 10% stock dividend was paid on December 1.What is the number of shares to be used in computing basic EPS?