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PROBLEM 13-6A
(a) (1) Land ........................................................... 140,000
Preferred Stock (1,200 X $100) ......... 120,000
Paid-in Capital in Excess of Par—
Preferred Stock .............................. 20,000
(3) Treasury Stock (1,500 X $11) .................... 16,500
Cash ................................................... 16,500
PROBLEM 13-6A (Continued)
(b) IRWIN CORPORATION
Stockholders’ equity
Paid-in capital
Capital stock
10% Preferred stock, $100
par value,
20,000 shares authorized,
1,200 shares issued and
outstanding ........................... $ 120,000
Additional paid-in capital
In excess of par—
preferred stock ..................... $ 20,000
In excess of stated value—
common stock ...................... 1,800,000
Retained earnings .................................. 82,000
Total paid-in capital and
retained earnings ........... 3,023,500
BYP 13-1 FINANCIAL REPORTING PROBLEM
(a) The common stock of Apple has no par value.
BYP 13-2 COMPARATIVE ANALYSIS PROBLEM
(a) Par value:
Coca-Cola, $0.25 per share.
PepsiCo, $0.01 2/3 per share.
BYP 13-3 COMPARATIVE ANALYSIS PROBLEM
(a) Par value:
Amazon, $0.01 per share.
Wal-Mart, $0.10 per share.
(b) Percentage of authorized shares issued:
Amazon, 483 ÷ 5,000 = 9.7%.
Wal-Mart, 3,233 ÷ 11,000 = 29.4%.
BYP 13-4 REAL-WORLD FOCUS
Answers will vary depending on the company chosen by the student.
BYP 13-5 DECISION MAKING ACROSS THE ORGANIZATION
(a) The market price of a share of stock is caused by many factors. Among
the factors to be considered are:
(1) the corporation’s anticipated future earnings,
(2) its expected dividend rate per share,
(3) its current financial position,
Par value is the amount assigned to each share of stock in the corporate
charter. Par value may be any amount selected by the corporation.
Generally, the amount of par value is quite low because states often levy
a tax on the corporation based on par value.
(b) A corporation may acquire treasury stock to:
(1) Reissue the shares to officers and employees under bonus and stock
compensation plans.
BYP 13-5 (Continued)
Treasury stock is not an asset. If treasury stock was reported as an
asset, then unissued stock should also be shown as an asset, also an
erroneous conclusion. Rather than being an asset, treasury stock
BYP 13-6 COMMUNICATION ACTIVITY
Dear Uncle Joe:
Thanks for your recent letter and for asking me to explain four terms.
Here are my explanations:
(1) Authorized stock is the total amount of stock that a corporation is given
permission to sell as indicated in its charter. If all authorized stock is
sold, a corporation must obtain consent of the state to amend its charter
before it can issue additional shares.
(2) Issued stock is the amount of stock that has been sold either directly
to investors or indirectly through an investment banking firm.
BYP 13-7 ETHICS CASE
(a) The stakeholders in this situation are:
The director of Pigua’s R & D division.
The president of Pigua.
The shareholders of Pigua.
(b) The president is risking the environment and everything and everybody in
it that is exposed to this new chemical in order to enhance his company’s
(c) A parent company may protect itself against loss and most reasonable
BYP 13-8 ALL ABOUT YOU
(a) Ernst and Young LLP was the CPA firm that audited Apple’s financial
statements.
(b) Apple’s basic earnings per share was $40.03 and its diluted earnings
per share was $39.75.
BYP 13-9 FASB CODIFICATION ACTIVITY
(a) Common Stock is a stock that is subordinate to all other stock of the
issuer. Also called common shares.
(b) Preferred Stock is a security that has preferential rights compared to
common stock.
(c) Shares include various forms of ownership that may not take the legal
form of securities (for example, partnership interests), as well as other
interests, including those that are liabilities in substance but not in
IFRS EXERCISES
IFRS 13-1
IFRS 13-2
MEENEN CORPORATION
Partial Statement of Financial Position (Partial)
December 31, 2017
Equity
Share capital—ordinary, €10 par value,
5,000 shares issued and 4,500 shares
outstanding .......................................................... €50,000
IFRS 13-3
Mar. 2 Organization Expense .................................... 30,000
Share Capital—Ordinary (5,000 X $1) ........ 5,000
Share Premium—Ordinary ......................... 25,000
Nov. 28 Treasury Shares ............................................. 80,000
Cash ............................................................. 80,000
IFRS 13-4 INTERNATIONAL FINANCIAL REPORTING PROBLEM
(a) (1) Total Equity ........................ €27,723,000,000
