Chapter 15: Question 1IFRS (page 825)
Where can authoritative IFRS guidance related to stockholders’ equity be found?
Short Answer
Authoritative IFRS guidance are IAS 1, IAS 32, and IAS 39
Chapter 15: Question 1IFRS (page 825)
Where can authoritative IFRS guidance related to stockholders’ equity be found?
Authoritative IFRS guidance are IAS 1, IAS 32, and IAS 39
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Get started for freeWoolford Inc. declared a cash dividend of $1.00 per share on its 2 million outstanding shares. The dividend was declared on August 1, payable on September 9 to all stockholders of record on August 15. Prepare all journal entries necessary on those three dates.
(Comparison of Alternative Forms of Financing) Shown below is the liabilities and stockholders’ equity section of the balance sheet for Jana Kingston Company and Mary Ann Benson Company. Each has assets totaling \(4,200,000.
Jana Kingston Co. | |
Current liabilities | \) 300,000 |
Long-term debt, 10% | 1,200,000 |
Common stock (\(20 par) | 2,000,000 |
Retained earnings (Cash dividends, \)328,000) | 700,000 |
\(4,200,000 |
Mary Ann Benson Co. | |
Current liabilities | \) 600,000 |
Common stock (\(20 par) | 2,900,000 |
Retained earnings (Cash dividends, \)328,000) | 700,000 |
\(4,200,000 |
For the year, each company has earned the same income before interest and taxes.
Jana Kingston Co. | Mary Ann Benson Co. | |
Income before interest and taxes | \)1,200,000 | \(1,200,000 |
Interest expense | 120,000 | 0 |
1,080,000 | 1,200,000 | |
Income taxes (45% | 486,000 | 540,000 |
Net income | \) 594,000 | \( 660,000 |
At year end, the market price of Kingston’s stock was \)101 per share, and Benson’s was $63.50.
Instructions
What are the different bases for stock valuation when assets other than cash are received for issued shares of stock?
Describe the accounting entry for a stock dividend, if any. Describe the accounting entry for a stock split, if any.
Dividends are sometimes said to have been paid “out of retained earnings.” What is the error, if any, in that statement?
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