Which statement best describes a possibleresult of treasury shares transactions? *May increase but not decrease retainedearningsMay increase net income if the cost methodis usedMay decrease but not increase retainedearningsThe excess of original issuance price overthe retirement cost is *Debited to retained earningsCredited to Share Premium - RetirementDebited to Share Premium - TreasuryShares and then Retained earningsNone of the above

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Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 5MC

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Which of the following will reduce Retained Earnings? a. Declaration of a stock dividendb. Payment of a cash dividendc. Profit for the periodd. None of these
Which of the following best describes the possible result of treasury share transactions? a. May decrease but not increase net income. b. May increase net income if the cost method is used. c. May increase but not decrease retained earnings. d. May decrease but not increase retained earnings.
13. For available-for-sale equity securities, receipt of a cash dividend would be reported as a. a reduction from retained earningsb. an increase in the investments available for sale accountc. a reduction in the investments available for sale accountd. dividend revenue
Which of the following is not a method that may be used to account for treasury shares?a. Cost methodb. Par value methodc. Retained earnings methodd. Constructive retirement methodC
The excess of original issuance price over the retirement cost is * O Debited to retained earnings Credited to Share Premium - Retirement Debited to Share Premium - Treasury Shares and then Retained earnings O None of the above
Why is there a cost for retained earnings? Group of answer choices Earnings can be reinvested or paid out as dividends Investors could buy other securities, earn a return Neither Either
The most important factor to consider when determining the dividends to be declared is a. the impact of inflation on replacement costs b. any future planned use of retained earnings d. the future planned use of cash available at the date of dividend distribution e. shareholders’ expectation about the firms’ profitability
Calculate: -cost of common equity from retained earnings, using the CAPM method. - cost of new common stock based on the CAPM
NPAT Less prefernce dividend is used in O a. Return on Equity O b. Return on Equity share capital О с. Return on Capital Employed O d. Debt service ratio
calculate the: -after-tax cost of debt -the cost of preferred stock -the cost of equity from retained earnings using the DCF method -the cost of newly issued common stock using the DCF method
hen treasury stock is sold for less than its cost, the entry should include a debit toa. Gain on Sale of Treasury Stock.b. Loss on Sale of Treasury Stock.c. Retained Earnings.d. Paid-in Capital in Excess of Par
When retiring treasury stock, retained earnings could be affected under which of the following methods? Cost Method Par Value Method I. No No II. No Yes III. Yes No IV. Yes Yes IV I III II

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Which statement best describes a possible result of treasury shares transactions? * May increase but not decrease retained earnings May increase net income if the cost method is used May decrease but not increase retained earnings