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CHAPTER 16 DILUTIVE SECURITIES AND EARNINGS PER SHARE IFRS questions are available at the end of this chapter. TRUE-FALSE —Dilutive Securities—Conceptual Answer No. Description T 1. Accounting for convertible bond issue. F 2. Reporting gain/loss on convertible debt retirement. T 3. Reporting additional payment to encourage conversion. F 4. Exercise of convertible preferred stock. F 5. Convertible preferred stock exercise. T 6. Allocating proceeds between debt and detachable warrants. F 7. Allocating proceeds from nondetachable warrants. T 8. Intrinsic value of a stock option. F 9. Compensation expense in fair value method. T 10. Service period in stock option plans. F 11. Accounting for nonexercise of stock options. F 12. Accounting for stock option forfeiture. T 13. Cumulative preferred stock and EPS. F 14. Restating shares for stock dividends and stock splits. T 15. Stock dividend and weighted-average shares outstanding. F 16. Preferred dividends and income before extraordinary items. T. 17. Reporting EPS in complex capital structure. F. 18. Dilutive stock options. T 19. Contingent issue shares. F 20. Reporting EPS for income from continuing operations. MULTIPLE CHOICE —Dilutive Securities, Conceptual Answer No. Description d 21. Nature of convertible bonds. d 22. Recording conversion of bonds. b 23. Classification of early extinguishment of convertible bonds. c S 24. Reasons for issuing convertible debt. a S 25. Reporting gain/loss on conversion of bonds. d S 26. Accounting for conversion of preferred stock. b 27. Recording conversion of preferred stock. d 28. Bonds issued with detachable stock warrants. d 29. Debt equity features of debt issued with stock warrants. d 30. Classification of stock warrants outstanding. d P 31. Bonds issued with detachable stock warrants. c P 32. Distribution of stock rights. b S 33. Difference between convertible debt and stock warrants. c S 34. Characteristics of noncompensatory stock option plan. a 35. Measurement of compensation in stock option. c 36. Recognition of compensation expense in a stock option plan. a 37. Compensation expense in a stock option plan. d 38. Characteristics of noncompensatory stock purchase plan. a *39. Compensation expense in an incentive stock option plan.
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Test Bank for Intermediate Accounting, Thirteenth Edition MULTIPLE CHOICE —Dilutive Securities, Conceptual (cont.) Answer No. Description d *40. Stock appreciation rights plan. b *41. Incentive stock option plan. b *42. Share-based liability awards. MULTIPLE CHOICE —Dilutive Securities, Computational Answer No. Description a 43. Conversion of convertible bonds. b 44. Conversion of convertible bonds. a 45. Exercise of stock purchase rights.
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