1. Foyle, Inc, had 700,000 shares of common EDTA, On July 1, 2015, an additional
ID: 2519274 • Letter: 1
Question
1. Foyle, Inc, had 700,000 shares of common EDTA, On July 1, 2015, an additional 40,000 shares of common stock were issued for cash e 20,000 shares of common stock at Foyle also had unexercised stock options to p per share outstanding at the beginning and end of 2015. The average market price of 9 2015. What is the number of shares that should be Foyle's common December 31 20dilted earnings pr share for the year ended a. 700,000 b. 727,500 C. 725,000 d. 720,000 e. None of the above 12,000 stock at $20 per share. The Black-Scholes option es total compensation expense to be $240,000. The option became completed three years of service On January 1, 2014, Sharp Corp. granted an employee an option to purchase shares of Sharp's $5 par value 2. pricing model dete exercisable on December 31, 2016, after the employee The market prices of Sharp's stock were as follows: $30 50 December 31, 2015 For 2015, should recognize compensation expense under the fair value method of a. $80,000. b. $70,000. c. $120,000 d. $24,000 3. On January 2, 2014, for past services, Rosen Corp. granted New Pine, its president, 150,000 stock appreciation rights that are exercisable immediately and expire on January 2, 2015. On exercise, New is entitled to receive cash for the excess of the price of the stock on the exercise date over the market price on the grant date. New did not exercise any of the rights during 2014. The market price of Rosen's stock was $20 on January 2, 2014, and $25 on December 31, 2014. As a result of the stock appreciation rights, Rosen should recognize compensation expense for 2014 of a. $0. b. $3,000,000. c. $750,000 d. $3,750,000 Litke Corporation issued at a discount of $5,000 a $100,000 bond issue convertible into 2,000 shares of common stock (par value $10). At the time of the conversion, the 4. d discount is $3,000, the market value of the bonds is $110,000, and the stock is quoted on the market at $60 per share. If the bonds are converted into common, what is the amount of paid-in capital in excess of par to be recorded on the conversion of the bonds? a. $58,000 b. $62,000 c. $77,000 d. $80,000 The pre-emptive right of a common stockholder is the right to a. 5. share proportionately in corporate assets upon liquidation. b. share proportionately in any new issues of stock of the same class. c. receive cash dividends before they are distributed to preferred stockholders d. exclude preferred stockholders from voting rightsExplanation / Answer
1)
Ans : C 725,000
notes
number of shares to be used = 700,000 x 6/12 + 740,000 x 6/12 + [(20-15)/20]x20,000
= 350,000 + 370,000 + 5,000 = 725,000
2)
Ans : a $80,000
option exercisable after completion of 3 years of service
compensation expense to be recognized = $240,000/3 = $80,000
3)
Ans : c $750,000
stock appreciation rights are 150,000
compensation expense to be recognized = stock appreciation rights x (market price on 31st dec-market price on grant date)
= 150,000x($25-$20) = $750,000
4)
Ans : c $77000
Bond issue price = $100,000-$5,000 = $95,000
discount amortized = $5,000-$3,000 = $2,000
current value of bonds = $95,000+$2,000 = $97,000
Bond convertible into 2,000 shares @par value 10 = 2,000x$10 = $20,000
Paid in capital in excess of par = $97,000-$20,000 = $77,000
5)
Ans : b
The pre-emptive right of a common stockholder is the right to share proportionately in any new issues of stock of the same class
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