Question;1. The recording of convertible bonds at the date;of issue is the same as the recording of straight debt issues.;2. Companies;recognize the gain or loss on retiring convertible debt as an extraordinary;item.;3. The;FASB states that when an issuer makes an additional payment to encourage;conversion, the payment should be reported as an expense.;4. The;market value method is used to account for the exercise of convertible;preferred stock.;5. Companies;recognize a gain or loss when stockholders exercise convertible preferred;stock.;6. A;company should allocate the proceeds from the sale of debt with detachable;stock warrants between the two securities based on their market values.;7. Nondetachable;warrants, as with detachable warrants, require an allocation of the proceeds;between the bonds and the warrants.;8. The;intrinsic value of a stock option is the difference between the market price of;the stock and the exercise price of the options at the grant date.;9. Under;the fair value method, companies compute total compensation expense based on;the fair value of options on the date of exercise.;10. The;service period in stock option plans is the time between the grant date and the;vesting date.;11. If;an employee fails to exercise a stock option before its expiration date, the;company should decrease compensation expense.;12. If;an employee forfeits a stock option because of failure to satisfy a service;requirement, the company should record paid-in capital from expired options.;13. If;preferred stock is cumulative and no dividends are declared, the company;subtracts the current year preferred dividend in computing earnings per share.;14. When;stock dividends or stock splits occur, companies must restate the shares;outstand-ing after the stock dividend or split, in order to compute the;weighted-average number of shares.;15. If;a stock dividend occurs after year-end, but before issuing the financial;statements, a company must restate the weighted-average number of shares;outstanding for the year.;16. Preferred;dividends are subtracted from net income but not income before extraordinary;items in computing earnings per share.;17. When;a company has a complex capital structure, it must report both basic and;diluted earnings per share.;18. In;computing diluted earnings per share, stock options are considered dilutive;when their option price is greater than the market price.;19. In;a contingent issue agreement, the contingent shares are considered outstanding;for computing diluted EPS when the earnings or market price level is met by the;end of the year.;20. A;company should report per share amounts for income before extraordinary items;but not for income from continuing operations.
Paper#48746 | Written in 18-Jul-2015Price : $19