Identify whether each of the following statements is True or False. True False M

Question

Identify whether each of the following statements is True or False. True False Mandatorily redeemable preferred stock is classified as owner's equity and is disclosed after common stock 1. Property dividends are valued at the fair market value of the property When a company pays a liquidating dividends, it debits the common stock for the amount 2. 3. 4. Scrip dividends are a liability on the date of declaration. Stock dividends of 45% of the outstanding shares of stock are valued at fair market value on the date of declaration. 5. If a company has cumulative preferred stock, the dividends in arears must be subtracted from the net income in the numerator of diluted earnings per share. 6. 7. Cash dividends become a liability to the corporation when 8. Unrealized gains from Available for Sale securities are reported as 9. Investments in bonds may be classified as trading securities, declared. other comprehensive income. available-for-sale securities, and held-to-maturity securities. 10. Z Company has significant influence over G Company and owns 40% of the voting stock of G Company, Z Company needs to use the fair value method of accounting for the investment in G Company Unrealized gains and losses from trading securities that result from the change in fair value during the period must be reported on the income statement. 11. 12. The temporary gains or losses from held-to-maturity must be reported in income for the current year 13. The equity method of accounting requires that a company adjust 14. Held-to-maturity securities are carried at fair value using the 15. Stock Appreciation rights are a form of compensation that allows 16. Stock options are a form of compensation which allows employees the cost of the investment to fair value at the end of each period. effective interest method. employees to purchase shares at a specific price. to receive stock or cash for the difference between stated value and the market value.

Explanation / Answer

1. True - As they are mandatory redeemable so its a liability and its like common Equity

2.True - Priperty devidend are declare on the value of property.

3. False - liquidation devidend are not paid out of profits and retained earning so common stock not debited.

4.False - Scrip devidend are devidend paid in share instead of cash. So when share will have issued im future then only liability will be considered.

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