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(solution) (TCO A) When issuing convertible bonds, a company would record


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(TCO A) When issuing convertible bonds, a company would record the bond issuance under i-GAAP as

 

(Points : 5)

 

a liability. part liability, part equity.

 

part liability, and record the conversion portion of the bond as a contra equity account until

 

converted.

 

None of the above 0 1397722709 MultipleChoice 1 Question 2. 2. (TCO A) During 2010, Gordon Company issued three hundred $1,000 bonds at 104 (due

 

in 10 years). One detachable stock warrant entitling the holder to purchase 15 shares of Gordon's

 

common stock was attached to each bond. At the date of issuance, the market value of the bonds,

 

without the stock warrants, was quoted at 96. The market value of each detachable warrant was

 

quoted at $40. What amount, if any, of the proceeds from the issuance should be accounted for as part

 

of Gordon's stockholders' equity?

 

(Points : 5)

 

$0

 

$12,000 $12,480 $11,856 0 1397722710 MultipleChoice 6 Question 3. 3. (TCO A) On January 1, 2010, Trent Company granted Dick Williams, an employee, an option to buy 100 shares of Trent Co. stock for $30 per share, the option exercisable for 5 years from

 

date of grant. Using a fair value option pricing model, total compensation expense is determined to be

 

$900. Williams exercised his option on September 1, 2010, and sold his 100 shares on December 1,

 

2010. Quoted market prices of Trent Co. stock during 2010 were as follows:

 

January 1

 

September 1

 

December 1 $30 per share

 

$36 per share

 

$40 per share The service period is for 2 years, beginning January 1, 2010. As a result of the option granted to

 

Williams, using the fair value method, Trent should recognize compensation expense for 2010 on its

 

books in the amount of (Points : 5)

 

$1,000. $900. $450. $0. 0 1397722711 MultipleChoice 8 Question 4. 4. (TCO A) Sharon Inc. issued to its existing common stockholders 1000 warrants. Each

 

warrant entitles the stockholder to purchase 2 shares of common stock at a price of $5 each. The

 

common stock of the company is selling in the stock exchange at $10 each. If Wonderful has 29,000

 

shares of common stock outstanding throughout the year and its Net Income is $12,000 after paying

 

the preferred dividends, what will be the dilutive EPS of Wonderful incorporation under treasury stock

 

method? Round your answer to two decimal points. (Points : 5)

 

$4 $0.40 $0.30 $0.36 0 1397722712 MultipleChoice 11 Question 5. 5. (TCO A) Marsh Co. had 2,400,000 shares of common stock outstanding on January 1 and

 

December 31, 2011. In connection with the acquisition of a subsidiary company in June 2010, Marsh is

 

required to issue 100,000 additional shares of its common stock on July 1, 2012, to the former owners

 

of the subsidiary. Marsh paid $200,000 in preferred stock dividends in 2011, and reported net income

 

of $3,400,000 for the year. Marsh's diluted earnings per share for 2011 should be (Points : 5)

 

$1.42.

 

$1.36.

 

$1.33.

 

$1.28.

 


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