Reference no: EM133033615

Questions -

Q1. On June 30, 2022, O'Hara Co. declared and issued a 10 percent stock dividend. Prior to this dividend, O'Hara had 60,000 shares of 10 par value common stock issued and outstanding. The market value of O'Hara Co.'s common stock on June 30, 2022, was 24 per share. As a result of this stock dividend, by what amount would O'Hara's total stockholders' equity increase (decrease)?

a. 0

b. 60,000

c. 84,000

d. (84,000)

Q2. Anazazi Co. offers all its 10,000 employees the opportunity to participate in an employee share-purchase plan. Under the terms of the plan, the employees are entitled to purchase 100 ordinary shares (par value 1 per share) at a 20 percent discount. The purchase price must be paid immediately upon acceptance of the offer. In total, 8,500 employees accept the offer, and each employee purchases on average 80 shares at 22 share (market price 27.50). Under IFRS, Anazazi Co. will record

a. No compensation since the plan is used to raise capital, not compensate employees.

b. Compensation expense of 5,500,000.

c. Compensation expense of 18,700,000.

d. Compensation expense of 3,740,000.

Q3. On January 1, 2021, Kline Company granted Morgan, its president, compensatory stock options to buy 10,000 shares of Kine's P10 par common stock. The options call for a price of P20 per share and are exercisable for 3 years following the grant date. Morgan exercised the options on December 31, 2021. The market price of the stock was P50 on January 1, 2021, and P70 on December 31, 2021.

By what net amount should stockholders' equity increase as a result of the grant and exercise of the options?

a. 200,000

b. 300,000

c. 500,000

d. 700,000