Horngren_SM_10

Horngren_SM_10 - CHAPTER 10 COVERAGE OF LEARNING OBJECTIVES...

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CHAPTER 10 COVERAGE OF LEARNING OBJECTIVES LEARNING OBJECTIVES QUESTIONS EXERCISES PROBLEMS OTHER LO1: Describe the rights of shareholders. 1,2,3,5,16, 22,23,28 32,34,35 46,47,48,67, 69 76 LO2: Account for common stock, including payment of dividends. 10,11,12,20 30,31,33,36, 44,45 49,50,53,54, 55,66,68,71, 72 74,75 LO3: Contrast bonds, preferred stock, and common stock. 6,8,9 37 76 LO4: Identify the economic characteristics of and account for stock splits. 14,29 38, 39 51,53,54,55 76 LO5: Account for both large- and small-percentage stock dividends. 13 40 52, 56 LO6: Explain and report stock repurchases and other treasury stock transactions. 4,15,17,18,19 26,27 41 57,58,59,60, 61,62,63 LO7: Record conversions of debt for equity or of preferred stock into common stock. 7,21 65 LO8: Use the rate of return on common equity and book value per share. 24,25 42,43 70 73 Chapter 10 Stockholders’ Equity 373
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CHAPTER 10 10-1 The preemptive privilege gives present shareholders the opportunity to purchase additional shares directly from the corporation before new shares can be sold to the general public. In this way, the shareholders are able to maintain their percentage ownership. 10-2 Unlike individual proprietors or partners, stockholders’ personal assets cannot be claimed by creditors to satisfy the debts of an incorporated entity. 10-3 No. Before a share of common stock can be outstanding, it must be duly authorized and issued. 10-4 No. Treasury stock is issued stock that has been repurchased by the issuer and is no longer outstanding. 10-5 Dividends are never liabilities unless declared. Here liabilities is used in the strict accounting sense. Cumulative dividends are conditional obligations as the statement implies. 10-6 No. Liquidating value is the dollar measurement of the preference to receive assets in the event of corporate liquidation . 10-7 Convertible securities are bonds and stocks that can be transformed into common shares at the option of the holder. 10-8 Preferred stock and debt both have fixed payment rates. A payment on preferred stock is called a dividend while the payment on debt is called interest. While interest is a legal obligation on the periodic payment date, dividends on preferred and common stock are not an obligation of the company until declared by the board of directors. Interest is an expense and reduces net income while preferred and common dividends do not reduce net income. Finally interest and dividends are often taxed differently for both the issuer and the investor. 10-9 Bonds are riskier for the corporation because interest and principal payments are legal responsibilities. Preferred stock is riskier for the investor because the corporation has no legal obligation to pay dividends and most preferred stocks have an infinite life. 10-10
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Horngren_SM_10 - CHAPTER 10 COVERAGE OF LEARNING OBJECTIVES...

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