Chapter 16 Dilutive Securities

Chapter 16 Dilutive Securities - Chapter 16 Dilutive...

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Chapter 16: Dilutive Securities 1. On January 2, 2006, Carr Co. issued 10- year convertible bonds at 105. During 2008 , these bonds were converted into common stock having an aggregate par value equal to the total face amount of the bonds. At conversion, the market price of Carr’s common stock was 50 percent above its par value . On January 2, 2006, cash proceeds from the issuance of the convertible bonds should be reported as a. paid-in capital for the entire proceeds. b. paid-in capital for the portion of the proceeds attributable to the conversion feature and as a liability for the balance. c. a liability for the face amount of the bonds and paid-in capital for the premium over the face amount. d. a liability for the entire proceeds. 2. Kane Co. issued bonds with detachable common stock warrants. Only the warrants had a known market value . The sum of the fair value of the warrants and the face amount of the bonds exceeds the cash proceeds. This excess is reported as a. Discount on Bonds Payable. b. Premium on Bonds Payable. c. Common Stock Subscribed. d. Paid-in Capital in Excess of Par—Stock Warrants. 3. On January 1, 2007, Doane Corp. granted an employee an option to purchase 6,000 shares of Doane's $5 par value common stock at $20 per share. The Black-Scholes option pricing model determines total compensation expense to be $140,000. The option became exercisable on
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This note was uploaded on 08/22/2010 for the course ACC accounting taught by Professor Dr.johnwilson during the Spring '09 term at University of Florida.

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Chapter 16 Dilutive Securities - Chapter 16 Dilutive...

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