As part of its stock-based compensation package, on January 1, 2016, Weldon Well
Supplies granted restricted stock units (RSUs) representing 100,000 $1 par common
shares. At exercise, holders of the RSUs are entitled to receive cash or stock equal in
value to the market price of those shares at exercise. The RSUs cannot be exercised
until the end of 2019 (vesting date) and expire at the end of 2021. The $1 par common
shares have a market price of $6 per share on the grant date. The fair value at December
31, 2016, 2017, 2018, 2019, and 2020, is $16, $12, $16, $10, and $12, respectively. All
recipients are expected to remain employed through the vesting date.
Required:
(1) Prepare the appropriate journal entry to record the award of RSUs on January 1,
2016.
(2) Prepare the appropriate journal entries pertaining to the RSUs on December 31,
2016-December 31, 2019.
(3) The RSUs remain unexercised on December 31, 2020. Prepare the appropriate
journal entry on that date.
(4) The RSUs are exercised on June 6, 2021, when the share price is $13, and
executives choose to receive cash. Prepare the appropriate journal entry(s) on that date.
Comet Cleaning Co. reported the following on its December 31, 2016, balance sheet:
Equipment (at cost) $3,000,000
In a disclosure note, Comet indicates that it uses straight-line depreciation over six
years and estimates salvage value as 10% of cost. Comet’s equipment averages 4.5
years at December 31, 2016.
Required:
What is the book value of Comet’s equipment at December 31, 2016?
Use the following to answer questions 119-124: You are reviewing O’Brian Co.’s
adjusted trial balance for the year ended 12/31/16. You notice several omissions and
incorrect items during your review, some of which are noted below. For each one, you
are to determine what effect, if any, these items would have on the stated components of
O’Brian Co.’s 2016 Income Statement and 12/31/16 Balance Sheet if they are not
corrected or updated. Assume no income taxes. Use the following code for your
answers. You need not include any dollar amounts.
N = No Effect
O = Overstated
U = Understated
Missoula Inc. reported the following selected financial statement data:
Required: Compute the average days in inventory for 2016.
In its 2016 annual report to shareholders, Ank-Morpork Times Inc. included the
following disclosure:
Revenue Recognition
-Advertising revenue is recognized when advertisements are published, are broadcast,
or when placed on the Company’s websites, net of provisions for estimated rebates,
credit and rate adjustments and discounts. -Circulation revenue includes single copy
and home-delivery subscription revenue. Single copy revenue is recognized based on
date of publication, net of provisions for related returns. Proceeds from home-delivery
subscriptions and related costs, principally agency commissions, are deferred at the
time of sale and are recognized in earnings on a pro rata basis over the terms of the
subscriptions. -Other revenue is recognized when the related service or product has
been delivered.
Also, the following information on its current liabilities was included in its comparative
balance sheets:
Required:
Assuming that Ank-Morpork Times Inc. collected $440,000,000 in cash for
home-delivery subscriptions during fiscal year 2016, what amount of revenue did it
recognize during 2016 from this source? Show the relevant T-account information to
support your answer.
Spartan Sportswear’s current assets consist of cash, marketable securities, accounts
receivable, and inventories. The following data were abstracted from a recent financial
statement:
Required: Compute the following for Spartan: Shareholders’ equity