中级会计学 intermediate accounting 赖红宁 chapter 15课后答案.doc

CHAPTER 15CONTRIBUTED CAPITALCONTENT ANALYSIS OF EXERCISES AND PROBLEMSNumberContentTime Range(minutes)E15-1Common Stock Issuance. Par-value, no-par (with and without a stated value). Record sale. 5-10E15-2Combined Sale of Stock. Preferred, common. Individual market values known and unknown. Journal entries. 5-10E15-3Sale of Stock with Bonds. Market value of bonds known and unknown. Journal entries. 5-10E15-4Issuance of Stock for Land. Market value of stock known, of land unknown. Market value of land known, stock unknown. Market value of land and stock known. Journal entries. Discussion of alternative values.10-15E15-5Stock Subscription. Journal entries to record the contract, down payment, receipt, default.10-15E15-6Stock Split. Three-for-one. Various changes in par value. Journal entries.10-15E15-7Compensatory Stock Options. Fair value method. Fixed plan. Journal entries. 5-10E15-8Compensatory Stock Options. Fair value method. Fixed plan. Change in estimate. Schedule. Journal entries.10-20E15-9Compensatory Stock Options. Fair value method. Performance-based plan. Changes in estimates. Schedule. Journal entry.10-20E15-10Stock Appreciation Rights. Schedule. Journal entry.10-20E15-11Convertible Preferred Stock. Record issuance and conversion.10-15E15-12Callable Preferred Stock. Journal entries to record issuance and recall. 5-15E15-13Stock Rights. Preferred stock. Record sale, issuance of warrants, expiration of warrants. 5-1515-97NumberContentTime Range(minutes)E15-14Various Journal Entries. No-par, stated-value common, par-value preferred. Sale, stock split, subscription, exchange.10-20E15-15Contributed Capital. Balance sheet preparation from a list of accounts. 5-10E15-16Treasury Stock. Cost method. Reacquisition, reissuance, retirement. Journal entries. 5-15E15-17Treasury Stock. Par-value method. Reacquisition, reissuance. Journal entries. Balance sheet disclosure.10-15E15-18Treasury Stock. Cost, par-value methods. Reacquisition, reissuance. Journal entries.10-15E15-19Treasury Stock. No-par. Cost method. Issuance, reacquisition, reissuance. Journal entries.10-20P15-1Stock Issuances. No-par, no-stated value common; convertible, callable preferred. Exchange, combined common and preferred. Journal entries. Discussion of reasons for values used.40-55P15-2Stock Issuances. Convertible, callable preferred; stated-value common. Exchange, purchase, package sales, conversion, stock split. Journal entries. Discussion of reasons for values used.40-55P15-3Subscriptions. Journal entries to record various transactions. Contract, downpayment, receipt, default.20-30P15-4Subscriptions. Contract, downpayment, receipt, default, sale. Journal entries.20-30P15-5Stock Rights. Journal entries to record issuance, sale, exercise, and expiration of warrants.30-40P15-6Compensatory Stock Options. Fair value method. Fixed plan. Changes in estimates. Schedule. Journal entries. Disclosure. Intrinsic value method.25-35P15-7Compensatory Stock Options. Fair value method. Performance-based plan. Changes in estimates. Schedule. Journal entries. Disclosure. Discussion.30-40P15-8Compensatory Stock Options. Fair value method. Performance-based plan. Changes in estimates. Schedule. Journal entries. Disclosure. Discussion.30-40P15-9Stock Appreciation Rights. Schedule to compute compensation expense. Journal entries.20-30NumberContentTime Range(minutes)P15-10Comprehensive. Determination of legal capital, average price of preferred stock issued, number of common shares issued. Journal entries for subscription, dividends, exchange, sale, treasury stock. Contributed capital portion of balance sheet.30-45P15-11Comprehensive. Journal entries for subscription, sale, purchase, dividends, stock split, treasury stock. Contributed capital portion of balance sheet.30-45P15-12Contributed Capital. Balance sheet preparation from a list of accounts. Appropriate parenthetical notes.20-30P15-13Contributed Capital. Preparation from a list of accounts with appropriate parenthetical notes.20-30P15-14Journal Entries. Reconstruction. Subscription, stock issuance, dividends, net income.45-75P15-15Treasury Stock. Cost, par-value methods. Reacquisition, reissuance, retirement. Journal entries, balance sheet disclosure.40-60P15-16Treasury Stock. Cost, par-value methods. Analysis - strengths and weaknesses of each method. Journal entries.40-60P15-17(AICPA adapted). Comprehensive: Stockholders Equity. Preparation of stockholders equity from alphabetical post-closing trial balance.20-30ANSWERS TO QUESTIONSQ15-1A corporations articles of incorporation usually include the names and addresses of the incorporators, the name and address of the corporation, the reason for its formation and nature of its business, the type of capital stock to be issued, the total authorized shares of each type of capital stock, and the respective par value (if any) per share. The charter may also include the names and addresses of the initial subscribers to the capital stock, the number of shares subscribed, the subscription price, and the down payment (if any).Q15-2(a) A public corporation is one owned or operated by a governmental unit. A private corporation is privately owned and may be a nonstock company organized for a nonprofit activity or a stock company intended to operate for profit. (b) An open corporation is one whose stock is available for public purchase. The stock of a closed corporation is not sold to the general public and is usually held by a few stockholders. (c) For a particular state, a domestic corporation is one which is incorporated in the state and a foreign corporation is one which operates in that state but is incorporated in another state.Q15-3(a) A stock certificate is a serially numbered document evidencing ownership in a corporation and stating the number of shares owned and the par value (if any) per share. (b) A stockholders ledger is a ledger containing the names and addresses of the individuals owning shares of stock in the corporation and the number of shares held. (c) A stock transfer journal is used to record the transfer of stock between new and former stockholders. It contains the date of the exchange, names and addresses of new and former stockholders, the stock certificate numbers, and the number of shares exchanged. The stock transfer journal is used to update the stockholders ledger. (d) A transfer agent is an individual or company employed by a corporation to perform the function of issuing the stock certificates.Q15-4The rights of a stockholder are: (a) to elect directors and to establish corporate issues, (b) to share in profits when a dividend is declared, (c) to maintain his or her percentage ownership in the corporation (called the preemptive right), if additional shares of capital stock are issued, and (d) to share in the proceeds from the sale of corporate assets upon liquidation. The most important rights are the right to share in profits and the preemptive right to maintain a proportionate ownership interest (when a large percentage of shares is owned).Q15-5(a)Authorized capital stock is the maximum number of shares of stock a corporation may issue as established in the corporate charter.(b)Issued capital stock is the number of shares of capital stock legally issued by a corporation as of a specific date.(c)Outstanding capital stock is the number of shares of issued stock still held by stockholders as of a specific date.(d)Treasury stock is the number of shares of issued stock that have been reacquired by the corporation but not retired. The difference between the issued and outstanding stock is the treasury stock.Q15-6A corporations legal capital is the amount of stockholders equity that must be maintained within the corporation and that it may not distribute to stockholders. It is used as a partial protection for creditors. The corporation may not make dividend distributions and treasury stock purchases if they would impair legal capital.Q15-7A corporations legal capital is determined according to the laws of each state. However, the par value or stated value of stock issued and subscribed or the entire proceeds of no-par stock issued and subscribed is usually the corporate legal capital.Q15-8The three components of stockholders equity are contributed capital, unrealized capital (if any), retained earnings, and accumulated other comprehensive income (if any). The basic framework is as follows:Stockholders EquityContributed capitalCapital stock$ XX Additional paid-in capital XXRetained earnings XXAccumulated other comprehensive income XXTotal stockholders equity$XXXQ15-9Preferred stock differs from common stock in that preferred dividends are stated as a per share amount or percentage of par, and certain rights or preferences are bestowed upon the preferred stockholders. These rights may include a preference to dividends, accumulation of dividends in arrears, participation in excess dividends, a higher rank in liquidation payoffs, and convertibility to common stock. Preferred stock may also be callable or redeemable by the corporation. However, preferred stockholders usually do not have voting privileges on corporate issues.Q15-10The entire amount of the proceeds received from the issuance of no-par, no-stated value stock is recorded in the Capital Stock account. No additional paid-in capital arises from the issuance of true no-par stock.Q15-11A stock subscription is a legally binding agreement between the corporation and the investor (subscriber) for a future purchase of the corporation=s stock on an installment basis. A corporation may report the account Subscriptions Receivable as a contra-stockholders equity account when collection is uncertain and therefore it is not assured of obtaining a future benefit. On the other hand, when collection is likely the corporation may report Subscriptions Receivable as a current asset because the subscription price is usually due within a year or the operating cycle, whichever is longer. It reports the Preferred Stock Subscribed account as a temporary contributed capital account because the agreement is legally binding but it has not yet legally issued the stock.Q15-12If a subscriber defaults on a stock subscription, a corporation can (a) return to the subscriber the entire amount paid in; (b) return to the subscriber the amount paid in, less any costs incurred by the corporation to reissue the stock; (c) issue to the subscriber a lesser number of shares based upon the total amount of payment received; or (d) require the forfeiture of all amounts paid in. The provisions for handling subscription defaults should be written into the subscription contract. Reference to this contract or to the relevant state laws should be made to determine the proper accounting for a subscription default.Q15-13The proceeds should be allocated to the common stock and the preferred stock on the basis of the relative fair values of the separate securities. In the case where the fair value of only one security is known the security should be assigned a portion of the proceeds equal to its fair value, and the remaining proceeds should be allocated to the other security. When no individual fair values are known, the allocation must be made on an arbitrary basis, but if a fair value is established for one (or both) of the securities in the near future, an adjustment of this allocation is made.Q15-14The amount to be recorded should be either the fair value of the stock issued or the asset received, whichever is more reliable.Q15-15(a) Watered stock results when the stockholders equity and asset sections of a corporations balance sheet are inflated due to the use of an unrealistically high value to record a nonmonetary issuance of stock. (b)Secret reserves result when the asset and stockholders equity sections are understated due to the use of an unrealistically low value to record a nonmonetary issuance of stock.Q15-16A stock split is an increase in the number of issued shares coupled with a proportionate reduction in the par or stated value of the capital stock. A disproportionate stock split occurs when the par value is not reduced in proportion to the increase in the number of shares issued. Neither affects a corporations total stockholders equity; usually, only the number of shares and the par value are affected. However, an adjustment of the amounts in the Capital Stock and Additional Paid-in Capital accounts is necessary in the case of a disproportionate stock split.Q15-17(a)The criteria for a noncompensatory stock option plan include the following:(1)Substantially all full-time employees qualify for participation in the plan on an equitable basis.(2)The discount from the market price does not exceed the greater of (a) a per-share discount that would be reasonable in an offer of stock to stockholders or others, or (b)the per-share amount of stock issuance costs avoided by not issuing the stock to the public. A purchase discount of up to 15% automatically complies with this criterion.(3)The plan has no option features, other than the following: (a)employees are allowed a short time (no longer than 31 days) from the date the purchase price is set to decide whether to enroll in the plan, and (b) the purchase price is based solely on the market price of the stock on the purchase date, and employees are permitted to cancel their participation before the purchase date and obtain a refund of any amounts previously paid.(b)A compensatory stock option plan differs from a noncompensatory plan in that it does not possess all of the three criteria listed in (a).(c)The intent of a noncompensatory plan is to raise capital or to obtain more widespread employee ownership of the corporate stock. A compensatory plan is offered to provide additional compensation to key employees.Q15-18Under the fair value method, the total compensation cost for a compensatory stock option plan is the total fair value of the stock options that actually become vested. The corporation recognizes this amount as compensation expense using the straight-line method over the service period.Q15-19Stock appreciation rights (SARs) are rights granted to key employees that enable them to receive cash, stock, or a combination of both equal to the excess of the market value over a stated price of the companys stock on the date of exercise.SARs are advantageous to an employee because the market appreciation of the companys stock can be received in cash on the date of exercise, thereby avoiding the cash outflow to actually acquire the stock.Q15-20a.A dividend preference is the right to a dividend of a predetermined amount before dividends are paid to common stockholders.b.Cumulative refers to the right of preferred stockholders to unpaid preferred dividends of previous years and the current year before a distribution of dividends may be made to common stockholders.c.Participating preferred stockholders share with common stockholders in any excess dividends.d.Convertible preferred stock may be exchanged at the stockholders option under specified conditions for another corporate security, usually common stock.e.Warrants represent rights (that might be attached to preferred stock) that allow the holder to purchase additional shares of common stock at a specified price over some future period.f.Callable preferred stock is stock which the corporation may recall (retire) from the holders under specified conditions at a predetermined price.g.Redeemable preferred stock is either subject to mandatory redemption at a specified price on a specified future maturity date or is redeemable at the option of the holder.Q15-21A preferred stock is similar to a long-term bond because the preferred dividend payments are often fixed as a percentage of the face (par) value, similar to interest on bonds. Dividend payments may also be cumulative, which is a type of guarantee like that given in regard to interest payments. A preferred stockholder and a bondholder normally have no voting rights. Preferred stockholders have preference in liquidation over common stockholders but are subordinate to bondholders. Preferred stock may be redeemable at a set price on a future maturity date like bonds. Both preferred stock and bonds may be callable and convertible.Preferred stock is similar to common stock because the payment of dividends (until declared) is not legally enforceable at a given point in time. Preferred stockholders are paid dividends like common stockholders. Neither dividend is deductible as an expense of doing business. Both may participate in excess dividends and both are listed in stockholders equity. Since both are ownership claims, they are subordinate to claims by creditors in liquidation.Q15-22The two segments of a corporations contributed capital are capital stock and additional paid-in capital. The capital stock segment might include the par value of preferred stock and common stock, common (or preferred) stock subscribed, stock warrants and options, and stock dividends to be distributed. Additional paid-in capital may be from preferred stock,