Far - Chapter 7

Front 1

Are compensating stock options booked wusing NBV or FMV?

Back 1

FMV

Front 2

What's the journal entry to record compensatory stock options?

Back 2

compensation expense
apic - stock options

Front 3

What's the journal entry for a stock dividend when the fair market value of the stock is greater than par?

Back 3

RE
- CS
-APIC

Front 4

What's the journal entry to record a large stock divended when the FMV of the stock is greater than par?

Back 4

RE
Cr: Capital stock (for par value only);
There is no ApIC credit here, even if the fmv is greater than par

Front 5

What is the journal entry for a scrip dividend?

Back 5

RE
Notes payable

Front 6

What's the difference ebtween a small and large stock dividend?

Back 6

small: < 20-25%
large: > 20-25%

Front 7

When is an option dilutive?

Back 7

When the market price of the common stock exceeds the exercise price of the option.

Front 8

Is disclosure required for
1) market risk
2) credit risk
of financial instruments

Back 8

1) No (encourages)
2) Yes

Front 9

What are the characteristics of a derivative?

Back 9

1. Has an underlying
2. has a notional amount
23. requires no initial investment
4. can be settled in a variety of ways

Front 10

When calculating diluted EPS, how is the diluted EPS numerator changed when considering convertible bonds?

Back 10

Add in interest expense, net of tax

Front 11

When is an entity deemed to have a simple capital structure?

Back 11

When it has only common stock outstanding

Front 12

What two ways must EPS be shown?

Back 12

EPS for income from continuing operations and EPS from net income

Front 13

What's the formula for EPS for a company with a simple capital structure?

Back 13

Income availabel to common shareholdres / weighted average number of common shares outstanding

Front 14

How do you account for stock dividends and stock splits when determining EPS?

Back 14

Must be treated as though it occurred at the beginning of the year.

Front 15

What is the journal entry for donated from the company's shareholder.
Is this done at nbv or fmv?

Back 15

donated treasury stock
apic
fmv

Front 16

What's the journal entry when stock is issued for less than par?

Back 16

cash
cs stock (par)
apic

Front 17

What is the journal entry for a subsciption receivable?

Back 17

Subscription receivable
common stock subsscribed
apic

Front 18

Legal capital is also referred to as what?

Back 18

Capital stock

Front 19

FACT
Stock appreciation rights: be sure to book the appropriate amount basd on required service period.

Back 19

n/a

Front 20

Know how to calculate the number of shares to be included for diluted eps for exercised stock options.

Back 20

n/a

Front 21

Do nonprofits have to abide by sfas ***, which accounts for derivatives?

Back 21

yes

Front 22

FACT
Examples of financial instruments: cash, foreign currency, stocks, partnership interests, bonds, derivatives, etc.

Back 22

n/a

Front 23

How do you determine the settlement amount of a derivative?

Back 23

notional amount * underlying

Front 24

capital stock is also referred toa s what?

Back 24

legal capital

Front 25

The par/stated value of common/preferred stock is referred to as this.

Back 25

Legal capital

Front 26

Is cash flow per share reported?

Back 26

No

Front 27

How is the issuance of stock rights accounted for?

Back 27

Memorandum entry only

Front 28

What's the journal entry for retirement of treasury stock?

Back 28

common stock @ par
treasury stock
(Apic if difference)

Front 29

How are gains/losses on the ineffective portion of a cash flow hedge accounted for?

Back 29

current income

Front 30

Using the cost method, how are gains recorded when reissuing treasury stock?

Back 30

credit apic

Front 31

Understand the difference between journal entries for purchasing treasury stock using the cost and legal methods.

Back 31

1. Cost: debit treasury stock for the cost.
2. Legal method: debit treasury stock for par; debit apic for the original apic amount; balance goes to retained earnings

Front 32

are dividends in arrears a legal liability?

Back 32

No

Front 33

This allows a corporation with a significant deficit in retained earnings to ewliminate that deficit and have a fresh start.

Back 33

Quasi-reorganization

Front 34

What are the steps in a quasi-reorganization?

Back 34

1. Write assets to fmv (no write ups)
2. Bring retained earnings to 0 by reduing paid in capital
3. Account for reductions in par value

Front 35

What are the two methods for account for treasury stock?

Back 35

1. COST method
2. legal method (par value)

Front 36

What is an underlying?

Back 36

The underlying asset (a rate, price or other variable that may or may not occur )

Front 37

How are gains/losses on derivatives-not-accounted-for-as-hedges, accounted for?

Back 37

Recognize in current earnings

Front 38

What section of the statement of cash flows changes whenusing the direct method instead of the indirect method?

Back 38

Cash flows from operating activities

Front 39

FACT
Know how to calculate weighted average number of shares outstanding.

Back 39

n/a

Front 40

An entity must eps from discontinued and extraordinary items. where do they show this?

Back 40

Income statement or notes.

Front 41

What's the formula for diluted eps?

Back 41

Income available to common stock shareholder + interest on dilutive securities / weighted-average number of common shares, assuming all dilutive securities are converted to common stock

Front 42

Name 4 kinds of common derivatives.

Back 42

options, futures, forwards, swaps

Front 43

What entities do notr have to disclose significant concentrations of credit risk arising from financial instruments?

Back 43

Non-public entities that have total assets less than $100 million and have no derivatives