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Unformatted text preview: Financial instruments that do not represent stock when they are issued but that could become stock at a future time are called Answer cash equivalents. derivative securities. dilutive securities. unsecured debt. Select the dilutive security from the following: Answer Cumulative preferred stock Debenture bond Callable bond Convertible preferred stock The major difference between convertible debt and stock warrants is that upon exercise of the warrants Answer the stock is held by the company for a defined period of time before they are issued to the warrant holder. the holder has to pay a certain amount of cash to obtain the shares. the stock involved is restricted and can only be sold by the recipient after a set period of time. no paid-in capital in excess of par can be a part of the transaction. Chase Corp sold 200, $1,000, 6.5 percent bonds at 105 on March 1, 2006. Each bond has 10 warrants attached, and each warrant allows its holder to purchase one share of $1 par value common stock at $10 per share. At the time of sale, the bonds without the stock warrants would have sold for 102, and the stock warrants for $10. The stock warrants will expire on December 31, 2008.Select the total value that Chase Corp should use to record the detachable warrants issued on March 1, 2006. Answer $50,00 $20,00 $18,75 $0 On July 1, 2007, an interest payment date, $60,000 of Booth Co. bonds were converted into 1,200 shares of Booth Co. common stock each having a par value of $45 and a market value of $54. There is $2,400 unamortized discount on the bonds. Using the book value method, Booth would record Answer no change in paid-in capital in excess of par. a $3,600 increase in paid-in capital in excess of par. a $7,200 increase in paid-in capital in excess of par. a $4,800 increase in paid-in capital in excess of par On December 1, 2007, Carmona Company issued at 103, two hundred of its 9%, $1,000 bonds. Attached to each bond was one detachable stock warrant entitling the holder to purchase 10 shares of Carmona's common stock. On December 1, 2007, the market value of the bonds, without the stock warrants, was 95, and the market value of each stock purchase warrant was $50. The amount of the proceeds from the issuance that should be accounted for as the initial carrying value of the bonds payable would be Answer $193,64 0. $195,70 0. $200,00 0. $206,00 0. Caruso Company had 500,000 shares of common stock issued and outstanding at December 31, 2007. On July 1, 2008 an additional 500,000 shares were issued for cash. Caruso also had stock options outstanding at the beginning and end of 2008 which allow the holders to purchase 150,000 shares of common stock at $20 per share. The average market price of Caruso's common stock was $25 during 2008. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2008?...
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This note was uploaded on 12/09/2010 for the course ACCT 5008 taught by Professor Cheriebaker during the Fall '10 term at American InterContinental University.
- Fall '10