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Exam 18: Shareholders Equity

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Question 71

Multiple Choice

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Which of the following statements is true when dividends are not declared or paid on cumulative preferred stock?

A) The shareholders must be allowed to convert their shares to common stock.
B) The unpaid dividends are accrued as a liability.
C) The unpaid dividends are reported in a note to the financial statements.
D) The unpaid dividends accrue interest until paid.

E) All of the above
F) A) and C)

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Question 72

Multiple Choice

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What was shareholders' equity as of December 31,2016?

A) $7,020,000.
B) $6,440,000.
C) $6,420,000.
D) $6,400,000.

E) All of the above
F) B) and D)

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Question 73

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Cash dividends become a binding liability as of the record date.

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 correct term.

When a property dividend is declared,the reduction in retained earnings is for:

When a property dividend is declared,the property to be distributed should be revalued to fair value as of the:

Under GAAP,the declaration of a property dividend may require the recognition of a gain or loss if the fair value of the property is different from its book value on the declaration date.

Which of the following statements is true with regard to preferred stock (preference shares) ?

Rick Co.had 30 million shares of $1 par common stock outstanding at January 1,2016.In October 2016,Rick Co.'s Board of Directors declared and distributed a 1% common stock dividend when the market value of its common stock was $60 per share.In recording this transaction,Rick would:

When a corporation acquires its own shares,those shares assume the same status as authorized but unissued shares,as if they never had been issued.Explain how this is reflected in the accounting records if the shares are formally retired.

Which of the terms or phrases listed below is more associated with financial statements prepared in accordance with U.S.GAAP than with International Financial Reporting Standards?

When stock is issued in exchange for property,the best evidence of fair value might be any of the following except:

The shareholders' equity section of Time Company's comparative balance sheets for the years ended December 31,2016 and 2015,reported the following data: During 2016,Time declared and paid cash dividends of $90 million.The company also declared and issued a stock dividend.No other changes occurred in shares outstanding during 2016.What was Time's net income for 2016?

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 correct term.

Stock designated as preferred usually has preferential rights over other classes of stock relative to dividends and liquidating distributions.

Treasury stock transactions never increase retained earnings or net income.

Use the following to answer questions The following partial information is taken from the comparative balance sheet of Levi Corporation: -What was the amount of net income earned by Levi during 2016?

Under IFRS,components of other comprehensive income:

How do U.S.GAAP and International Financial Reporting Standards (IFRS)differ with respect to debt and equity for preferred stock?

The shareholders' equity of HS Corporation includes $300,000 of $1 par common stock and $600,000 par value of 6% cumulative preferred stock.The board of directors of HS declared cash dividends of $70,000 in 2016 after paying $30,000 cash dividends in 2015 and $50,000 in 2014. Required: What is the amount of dividends common shareholders will receive in 2016?