Chapter 15: Question 7IFRS (page 825)
Kaymer Corporation issued 300 shares of \(10 par value ordinary shares for \)4,500. Prepare Kaymer’s journal entry.
The total value of share capital – ordinary is $3,000.
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Twenty-five thousand shares reacquired by Elixir Corporation for \(53 per share were exchanged for undeveloped land that has an appraised value of \)1,700,000. At the time of the exchange, the common stock was trading at $62 per share on an organized exchange.
Instructions
a) Prepare the journal entry to record the acquisition of land assuming that the purchase of the stock was originally recorded using the cost method.
b) Briefly identify the possible alternatives (including those that are totally unacceptable) for quantifying the cost of the land and briefly support your choice.
(Dividend Entries) The following data were taken from the balancesheet accounts of Masefield Corporation on December 31, 2016.
Current assets \(540,000
Debt investments (trading) 624,000
Common stock (par value \)10) 500,000
Paid-in capital in excess of par 150,000
Retained earnings 840,000
Instructions
Prepare the required journal entries for the following unrelated items.
Under IFRS, the amount of capital received in excess of par value would be credited to:
(a) Retained Earnings.
(b) Contributed Capital.
(c) Share Premium.
(d) Par value is not used under IFRS
Kellogg Company is the world’s leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg.
(in millions) | 2014 | 2013 |
Net sales | \(14,580 | \)14,792 |
Net income | 632 | 1,807 |
Total assets | 15,153 | 15,474 |
Total liabilities | 12,302 | 11,867 |
Common stock, $0.25 par value | 105 | 105 |
Capital in excess of par value | 678 | 626 |
Retained earnings | 6,689 | 6,749 |
Treasury stock, at cost | 3,470 | 2,999 |
Number of shares outstanding (in millions) | 358 | 363 |
Instructions
Washington Company has the following stockholders’ equity accounts at December 31, 2017.
Common Stock (\(100 par value, authorized 8,000 shares) \)480,000
Retained Earnings 294,000
Instructions
a. Prepare entries in journal form to record the following transactions, which took place during 2018.
1. 280 shares of outstanding stock were purchased at \(97 per share. (These are to be accounted for using the cost method.)
2. A \)20 per share cash dividend was declared.
3. The dividend declared in (2) above was paid.
4. The treasury shares purchased in (1) above were resold at \(102 per share.
5. 500 shares of outstanding stock were purchased at \)105 per share.
6. 350 of the shares purchased in (5) above were resold at \(96 per share.
b.Prepare the stockholders’ equity section of Washington Company’s balance sheet after giving effect to these transactions, assuming that the net income for 2018 was \)94,000. State law requires restriction of retained earnings for the amount of treasury stock.
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