Intermediate Accounting Exam 2 (Latest
Questions With Verified Answers) Rated A+
The general "cut line" for determining whether fair value or equity method is used in valuing equity
securities is ______________. [ 10%, 20%, 50% ]
20%
The general "cut line" for determining whether equity value or consolidated method is used in valuing
equity securities is _____________. [50%, 60%, 80% ]
50%
On January 1, 2017; RHYME Company (a calendar fiscal year company) had 20,000 shares of stock
outstanding. On February 27, a 3 for 2 stock split was announced. On April 1, 12,000 new shares of stock
were issued and on October 1, 6,000 shares were retired. No shares were in the treasury during 2017.
Calculate weighted average shares of stock outstanding for 2017.
20,000 * 3/2 = 30,000
12,000 * 9/12 = 9,000
6,000 * 3/12 = 1,500
30,000 + 9,000 - 1,500 = 37,500
The "treasury stock" method of calculating shares outstanding for diluted earnings per share is used
when?
A. bonds are converted to common stock
B. preferred stock is converted to common stock
,C. stock options are exercisable
D. treasury stock has been reissued
C. stock options are exercisable
Which of the following is NOT a classification for debt securities investments?
A. available for sale
B. consolidated
C. held to maturity
D. trading
B. consolidated
Assume that basic earnings per share would be $2.00. Which of the following securities would be
ANTIDILUTIVE?
A. convertible bonds, 5,000 shares would be issued, interest expense of $12,000 (adjusted for taxes)
would be avoided.
B. convertible preferred stock, 10,000 additional shares would be used; preferred dividends of $14,000
would be avoided.
C. stock options permitting issuance of 5,000 shares would be issued; exercise price is $30; present stock
price is $40.
D. a 10% stock dividend will be issued if net income exceeds $100,000 for the year.
A. convertible bonds, 5,000 shares would be issued, interest expense of $12,000 (adjusted for taxes)
would be avoided.
, If applicable, which of the following would be subtracted from net income in calculating earnings per
share?
A. common dividends
B. preferred dividends
C. prior period adjustments
D. treasury stock
B. preferred dividends
Separate calculation of EPS is NOT required for:
A. cumulative effect-change of accounting principle
B. discontinued operations
C. extraordinary gains and losses
D. selling and administrative expense
D. selling and administrative expense
Which of the following is NOT a category used in grouping equity securities?
A. available for sale
B. consolidated
C. held-to-maturity
D. trading
C. held-to-maturity
Questions With Verified Answers) Rated A+
The general "cut line" for determining whether fair value or equity method is used in valuing equity
securities is ______________. [ 10%, 20%, 50% ]
20%
The general "cut line" for determining whether equity value or consolidated method is used in valuing
equity securities is _____________. [50%, 60%, 80% ]
50%
On January 1, 2017; RHYME Company (a calendar fiscal year company) had 20,000 shares of stock
outstanding. On February 27, a 3 for 2 stock split was announced. On April 1, 12,000 new shares of stock
were issued and on October 1, 6,000 shares were retired. No shares were in the treasury during 2017.
Calculate weighted average shares of stock outstanding for 2017.
20,000 * 3/2 = 30,000
12,000 * 9/12 = 9,000
6,000 * 3/12 = 1,500
30,000 + 9,000 - 1,500 = 37,500
The "treasury stock" method of calculating shares outstanding for diluted earnings per share is used
when?
A. bonds are converted to common stock
B. preferred stock is converted to common stock
,C. stock options are exercisable
D. treasury stock has been reissued
C. stock options are exercisable
Which of the following is NOT a classification for debt securities investments?
A. available for sale
B. consolidated
C. held to maturity
D. trading
B. consolidated
Assume that basic earnings per share would be $2.00. Which of the following securities would be
ANTIDILUTIVE?
A. convertible bonds, 5,000 shares would be issued, interest expense of $12,000 (adjusted for taxes)
would be avoided.
B. convertible preferred stock, 10,000 additional shares would be used; preferred dividends of $14,000
would be avoided.
C. stock options permitting issuance of 5,000 shares would be issued; exercise price is $30; present stock
price is $40.
D. a 10% stock dividend will be issued if net income exceeds $100,000 for the year.
A. convertible bonds, 5,000 shares would be issued, interest expense of $12,000 (adjusted for taxes)
would be avoided.
, If applicable, which of the following would be subtracted from net income in calculating earnings per
share?
A. common dividends
B. preferred dividends
C. prior period adjustments
D. treasury stock
B. preferred dividends
Separate calculation of EPS is NOT required for:
A. cumulative effect-change of accounting principle
B. discontinued operations
C. extraordinary gains and losses
D. selling and administrative expense
D. selling and administrative expense
Which of the following is NOT a category used in grouping equity securities?
A. available for sale
B. consolidated
C. held-to-maturity
D. trading
C. held-to-maturity
