Question :
71. In IFRS, preferred stock subject to redemption at the option : 1245790
71. In IFRS, preferred stock subject to redemption at the option of the preferred shareholders appears
A. between liabilities and shareholders’ equity.
B. as a liability.
C. as a shareholders’ equity.
D. as a revenue.
E. as an expense.
72. In IFRS, preferred stock subject to mandatory redemption is disclosed
A. between liabilities and shareholders’ equity.
B. as a liability.
C. as a shareholders’ equity.
D. as a revenue.
E. as an expense.
73. In U.S. GAAP, preferred stock subject to mandatory redemption is disclosed
A. between liabilities and shareholders’ equity.
B. as a liability.
C. as a shareholders’ equity.
D. as a revenue.
E. as an expense.
74. Which of the following is/are true?
A. U.S. GAAP and IFRS classify preferred stock subject to redemption only at the option of the issuing firm as shareholders’ equity.
B. U.S. GAAP and IFRS classify preferred stock subject to mandatory redemption is a liability.
C. U.S. GAAP classify preferred stock subject to redemption at the option of the preferred shareholders appears between liabilities and shareholders’ equity.
D. IFRS classify preferred stock subject to redemption at the option of the preferred shareholders appears as a liability.
E. all of the above
75. In most cases, U.S. GAAP requires firms to allocate the full issue price of Convertible Bonds or Convertible Preferred Stock
A. to the bonds or preferred stock and none of the price to the conversion feature.
B. to the bonds or preferred stock and the conversion feature based on fair values.
C. to the bonds or preferred stock and the conversion feature based on the present value of future cash flows.
D. to the bonds or preferred stock and the conversion feature based on the future value of present cash flows.
E. to the price to the conversion feature and none to the bonds or preferred stock.
76. Which of the following is/are true concerning convertible bonds or convertible preferred stock?
A. Convertible bonds and convertible preferred stock permit the owner either to hold the security as a bond or preferred stock or to convert the security into shares of common stock.
B. The owner cannot detach and transfer, or separately exercise, the conversion option.
C. The issue price of a convertible bond or convertible preferred stock is payment for both debt or preferred stock and for the conversion option, but no one can observe the fair value of these separate components.
D. choices a and b, only.
E. choices a, b, and c.
77. Which of the following is/aretrue concerning convertible bonds or convertible preferred stock?
A. Convertible bonds and convertible preferred stock permit the owner either to hold the security as a bond or preferred stock or to convert the security into shares of common stock.
B. The owner cannot detach and transfer, or separately exercise, the conversion option.
C. The issue price of a convertible bond or convertible preferred stock is payment for both debt or preferred stock and for the conversion option, but no one can observe the fair value of these separate components.
D. U.S. GAAP requires firms to allocate the full issue price to the bonds or preferred stock and none of the price to the conversion feature.
E. all of the above
78. Evenrude Corporation is a new company about to issue stock. The corporation sells 2,000 shares of common stock (par value $2) at $10 per share. The journal entry to record this transaction is:
A. Cash 2,000
Common Stock 2,000
B. Cash 20,000
Common Stock 4,000
Additional Paid-in Capital 16,000
C. Cash 20,000
Owners’ Liability 16,000
Common Stock 4,000
D. Cash 20,000
Accounts Payable 20,000
E. Cash 20,000
Notes Payable 20,000
79. A firm issues convertible bonds that pay 8% interest and receives $100,000. The firm could have issued nonconvertible bonds that pay 8% interest but would have received only $80,000 in bond proceeds. What journal entry is necessary under GAAP to record the issuance of the convertible bonds?
A. Cash 100,000
Convertible Bonds Payable 80,000
Additional Paid-in Capital 20,000
B. Cash 100,000
Convertible Bonds Payable 80,000
Convertible Bond income 20,000
C. Cash 100,000
Convertible Bonds Payable 100,000
D. Convertible Bonds Payable 100,000
Cash 100,000
E. No entry is required
80. A firm decides to issue stock, pursuant to a stock split, on a 2-for-1 basis. What entry is necessary for this issuance?
A. Retained Earnings
Common Stock–Par Value
B. Additional Paid-in Capital
Common Stock–Par Value
C. Retained Earnings
Common Stock–Par Value
Common Stock–Additional Paid-in Capital
D. Common Stock–Par Value
Common Stock–Additional Paid-in Capital
Retained Earnings
E. No journal entry is necessary but the par value of the stock must be restated on a per share basis.
