Reference no: EM132730823

Problem 1: How should cumulative preference dividends in arrears be reported in the statement of financial position?

Group of answer choices

Option 1: Increase in current liabilities for the amount expected to be declared within the year or operating cycle, and increase in noncurrent liabilities for the balance.

Option 2: Increase in shareholders' equity.

Option 3: Increase in current liabilities.

Option 4: Note disclosure.

Problem 2: Which of the following statements is true regarding the effect that dilutive convertible bonds have on the earnings per share computation?

Group of answer choices

Option 1: The number of shares would be converted is substracted from the denominator and interest net of tax is subtracted from the numerator.

Option 2: The number of share the bonds would be converted is added to the denominator and interest net of tax is added to the numerator.

Option 3: The number of shares the bonds would be converted is added to the denominator and interest net of tax is subtracted from the numerator.

Option 4: The number of share the bonds would be converted from the denominator and interest net of tax is added to the numerator.