Inversely, when a share repurchase is seen as treasury stock, the cost of the treasury stock is naturally disclosed as a decrease in total shareholders’ equity. Alcoa would report the purchase of the treasury stock by debiting treasury stock and crediting cash for the charge of the purchase. The treasury stock ought to be disclosed independently in the shareholders' equity area of Alcoa’s balance sheet as an unallocated cut of shareholders' equity. These shares are treated as issued although not part of common stock outstanding. If subsequently resold for a sum larger than the cost, Alcoa should report for the sale of the treasury stock by debiting cash for the sale cost, crediting treasury stock for cost, and crediting additional paid-in capital from repurchased stock for the excess of the selling price over the cost.
Peter Swap I. Issue: Will recognizing compensation expense as part of Mizri Corporation’s stock compensation plan faithfully represent the exchange? II. GAAP List: * 718-10-30-22: An equity instrument for which it is not possible to reasonably estimate fair value at the grant date shall be accounted for based on intrinsic value * 718-20-35-3: A modification of an equity award shall be treated as an exchange of the original award for a new award incurring additional compensation cost for any incremental value III. Alternatives: A.
e. What other methods could be used to estimate the cost of debt if, for example, Ace’s outstanding debt had not been traded recently? 4. a. What is Ace’s cost of preferred stock?
D. balance sheet as an item of stockholders’ equity. 44) Which of the following statements is false? A. Cash dividends should be recorded as a liability when they are declared by the board of directors. B.
• ignore cash payouts to stockholders. • ignore the size, risk, and timing of cash flows. 5. The maximum rate at which a firm can grow while maintaining a constant debt-equity ratio is bestdefined by its: • rate of return on assets. • internal rate of growth.
| Question: | (TCO 1) In a situation where the investor exercises significant influence over the investee, which of the following entries is not actually posted to the books of the investor? 1) Debit to the Investment account and a Credit to the Equity in Investee Income account. 2) Debit to Cash (for dividends received from the investee) and a Credit to Dividend Revenue. 3) Debit to Cash (for dividends received from the investee) and a Credit to the Investment account. | | Your Answer: | | | Entries 1 and 2 | | INCORRECT | | | Entries 2 and 3 | | | | | Entry 1 only | | | | | Entry 2 only | | CORRECT ANSWER | | | Entry 3 only | | | | | | Points Received: | 0 of 2 | | Comments: | | 4.
Case 2 Solution: Problem Identification: How should a company account for forfeited stock subscriptions? Moreover, do such payments constitute operating or other income? Keywords: Stock Subscription; operating income; additional paid-in capital; owners’ equity; net income; operating income. Conclusion: Per 505-10-25-2, capital transactions that incur no future corporate obligations should be excluded from calculating net or operating income. Thus, the forfeited cash should become part of additional paid-in capital about any
? How does systematic risk differ from unsystematic risk? What is meant by the Capital Asset Pricing Model? Describe how it relates to expected return and risk. Find the real return on the following investments: Stock Nominal Return Inflation A 10% 3% B 15% 8% C -5% 2% ?
Debt is defined by the course text as accumulated deficits minus accumulated surpluses (Colander, 2010). Debt is considered a stock measure (defined at a certain point in time). This is in comparison to deficits and surpluses being recognized as flow measures (defined for a period of time). In economics debt is the end result of running an excessive deficit for an extended period of time. As deficits are accrued, money needs to be borrowed to cover the shortfall.
Why does the graph on capitalization show curves and not lines ? Because the power of capitalization is directly linked with the duration and because you earn interest on interest earned before. 3. Are initial flows on an investment more often positive or negative ? What about for final cash flows ?