Question : 71. Which of the following not true? A. Firms issue common stock for : 1230430

71. Which of the following is not true? A. Firms issue common stock for assets other than cash, for example, to acquire another firm. B. Firms generally issue common shares, both at the time of initial incorporation and in subsequent years, for amounts greater than par (or stated) value. C. The firm records the shares exchanged for noncash assets at the fair value of the shares given or, if the firm cannot make a reasonable estimate, at the fair value of the assets received.D. Firms may issue capital stock (preferred or common) for cash or for noncash assets. E. Firms generally issue preferred shares, both at the time of initial incorporation and in subsequent years, for amounts greater than par (or stated) value.

72. Corporations often sell, or exchange for goods and services, various call options on their shares. Which of the following is not true? A. A call option gives the holder the right to acquire shares of common stock at a fixed or determinable price, called the strike price or exercise price. B. If the market price of the shares increases above the exercise price, the holder of the option can benefit by exercising the option to purchase shares. C. The excess of the market price over the exercise price is the option’s intrinsic value. D. Many firms pay part of the compensation of some employees by issuing call options on their own shares referring to these arrangements as employee stock options (ESOs).E. none of the above

73. Corporations often sell, or exchange for goods and services, various call options on their shares. Which of the following is not true?  A. A call option gives the holder the right to acquire shares of common stock at a fixed or determinable price, called the strike price or exercise price. B. If the market price of the shares increases above the exercise price, the holder of the option can benefit by exercising the option to purchase shares. C. The excess of the exercise price over the market price is the option’s intrinsic value. D. Many firms pay part of the compensation of some employees by issuing call options on their own shares referring to these arrangements as employee stock options (ESOs).E. Firms may also sell or exchange call options for goods and services with counterparties other than employees.

74. Firms sometimes issue bonds or preferred stock with stock warrants.  Which of the following is not true? A. The stock warrant permits the holder to exchange the warrant and a specified amount of cash for shares of the firm’s common stock.B. The preferred shareholders benefit if the market price of the common stock increases. C. Firms may issue preferred stock with stock warrants attached.D. Attaching a stock warrant permits the firm to issue preferred stock with a lower dividend rate. E. none of the above

75. An understanding of the accounting for employee stock options (ESOs) requires several definitions. Which of the following is not true? A. The grant date is the date employees exchange the option and cash for shares of common stock. B. The vesting date is the first date employees can exercise their stock options. C. A vesting period that depends only on the passage of time is a service conditionD. A vesting period that depends on achieving a specified level of profitability or meeting some other nonshare-price-based target is a performance condition; E. a vesting period that depends on the firm’s stock price reaching a specified target is a market condition.

76. Regarding employee stock options (ESOs), which of the following is not true? A. The exercise price is the price specified in the stock option contract for purchasing the common stock.B. The vesting date is the first date employees can exercise their stock options. C. The exercise date is the date employees exchange the option and cash for shares of common stock. D. The market price is the price of the stock as it trades in the market. E. a vesting period that depends on the firm’s stock price reaching a specified target is a performance condition.

77. Which of the following is/are true concerning an employee stock options’ benefit element? A. One cannot measure the amount of the benefit element before the exercise date. B. Stock options with exercise prices less than the current market price of the stock have a higher value, other things equal, than stock options with exercise prices exceeding the current market price of the stock.C. Stock options that are “in the money” have a higher value, other things equal, than stock options that are “out of the money”.D. choices a and b, only.E. choices a, b, and c.

78. Which of the following is/are not true concerning an employee stock options’ benefit element? A. One cannot measure the amount of the benefit element before the exercise date. B. Stock options with exercise prices less than the current market price of the stock have a higher value, other things equal, than stock options with exercise prices exceeding the current market price of the stock.C. Stock options that are “in the money” have a higher value, other things equal, than stock options that are “out of the money”.D. A stock option whose exercise price exceeds the current market price has economic value because of the possibility that the market price will exceed the exercise price on the exercise date . E. none of the above

79. Which of the following is/are true concerning an employee stock options’ time value element? A. One cannot measure the amount of the element before the expiration date.B. Stock options with exercise prices less than the current market price of the stock have a higher value, other things equal, than stock options with exercise prices exceeding the current market price of the stock.C. Stock options that are “in the money” have a higher value, other things equal, than stock options that are “out of the money”.D. A stock option whose exercise price exceeds the current market price has economic value because of the possibility that the market price will exceed the exercise price on the exercise date . E. none of the above

80. Which of the following is/are true concerning an employee stock options’ time value element? A. The time value element results from the possibility of increases in the market price of the stock during the exercise period. B. Time value is larger the longer the exercise period and the more volatile the market price of the stock. C. A stock option whose exercise price exceeds the current market price has economic value because of the possibility that the market price will exceed the exercise price on the exercise date. D. A stock option whose exercise price has zero intrinsic value has economic value because of the possibility that on the exercise date there would be positive intrinsic value. E. all of the above