Questions from Intermediate Accounting


Q: The Goldwick Company awarded 1,000 options to acquire 1,

The Goldwick Company awarded 1,000 options to acquire 1,000 shares of its common stock, which can be sold back to the company. The options vest over 3 years. The market price and the exercise price we...

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Q: Tommi-Boy Jeans, Inc. awarded 4,000 options

Tommi-Boy Jeans, Inc. awarded 4,000 options to acquire 4,000 shares of its preferred stock that can be sold back to the company. At the grant date, the options have a fair value of $12 each and cannot...

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Q: Togo Incorporation started a share appreciation plan on January 1, 2018

Togo Incorporation started a share appreciation plan on January 1, 2018, when it granted 50,000 rights to its executives. The vesting period is 2 years. The stock appreciation rights are settled for c...

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Q: Molino Motors, Inc. reported net income equal to $1

Molino Motors, Inc. reported net income equal to $1,200,000, which includes a $650,000 after-tax loss from discontinued operations. Molino has 700,000 common shares outstanding for the entire year. Pr...

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Q: Crowe Interior Designs of Santa Monica granted 300,000 qualified employee

Crowe Interior Designs of Santa Monica granted 300,000 qualified employee options on June 1 of the current year. The options allow employees to exchange each option for 36 shares of the company’s comm...

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Q: Nickelfront Welders, Inc. granted 300,000 employee options on

Nickelfront Welders, Inc. granted 300,000 employee options on July 1 of the current year. Employees can exercise each option and receive two shares of the company’s common stock at an exercise price o...

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Q: Perlu Products reported a write-down loss of $65,

Perlu Products reported a write-down loss of $65,000 for one of its plant assets on December 31, 2018. The asset is currently held for disposal. At December 31, 2019, the fair value of the asset incre...

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Q: Nick’s Liquidators reported 450,000 shares of common stock outstanding for

Nick’s Liquidators reported 450,000 shares of common stock outstanding for the year. The company also had stock options outstanding all year that will result in 125,000 incremental shares upon exercis...

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Q: Axelon Enterprises has asked you to determine whether its proposed issue of

Axelon Enterprises has asked you to determine whether its proposed issue of convertible debt will have dilutive effects on earnings per share. If the convertible bonds prove to be dilutive, the compan...

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Q: Rainbow Company reported $239,000 net income for the current

Rainbow Company reported $239,000 net income for the current year. It has 100,000 shares of common shares outstanding for the entire year and another 50,000 shares of 3% nonconvertible, cumulative, $1...

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