Reference no: EM133035198
Questions -
Q1. Wolf Company's grant of 30,000 stock appreciation rights enables key employees to receive cash equal to the difference between P20 and the market price of the stock on the date each right is exercised. The service period is 2020 through 2022, and the rights are exercisable in 2023. The market price of the stock was P25 and P28 on December 31, 2020 and 2021, respectively.
What amount should Wolf report as the liability under the stock appreciation rights plan in its December 31, 2021 balance sheet?
a. 0
b. 130,000
c. 160,000
d. 240,000
Q2. Berry Corporation has 50,000 shares of 10 par ordinary shares authorized. The following transactions took place during 2020, the first year of the corporation's existence:
Sold 5,000 ordinary shares for 18 per share.
Issued 5,000 ordinary shares in exchange for a patent valued at 100,000.
At the end of the Berry's first year, total contributed capital amounted to
a. 40,000.
b. 90,000.
c. 100,000.
d. 190,000.
Q3. On January 1, 2021, Dorie Company granted an employee an option to purchase 30,000 shares of Dorie's P5 par value common stock at P20 per share. The option became exercisable on December 31, 2022, after the employee completed two years of service. The option was exercised on January 15, 2023. The market prices of stock were as follows:
January 1, 2021 30
December 31, 2021 50
January 15, 2023 45
For 2021, Dorie should recognize compensation expense of
a. 450,000
b. 375,000
c. 150,000
d. 0
Q4. On January 1, 2021, ABC Company offered its chief executive officer, stock appreciation rights with the following terms:
Predetermined price P100 per share
Number of shares 10,000 shares
Service period - 3 years 2021,2022and 2023
Exercise date December 31, 2023
The stock appreciation rights are exercised on December 31, 2023. The quoted price of the ABC stock is as follows: P118 on December 31, 2021, P112 on December 31, 2022, and P124 on December 31, 2023.
ABC Company should record 2023 compensation expense at
a. 160,000
b. 60,000
c. 80,000
d. 20,000
Q5. In 2021, Eklund, Inc., issued for 103 per share, 60,000 shares of 100 par value convertible preference shares. One share of preference shares can be converted into three shares of Eklund's 25 par value ordinary shares at the option of the preference shareholder. In August 2022, all of the preference shares were converted. The fair value of the ordinary shares at the date of the conversion was 30 per share. What total amount should be credited to share premium-ordinary as a result of the conversion of the preference shares into ordinary shares?
a. 1,020,000.
b. 780,000.
c. 1,500,000.
d. 1,680,000.