Reference no: EM132519473

Question 1: FNR Inc. has 100,000 common shares outstanding with the related balance in the common shares account being $2,000,000.

The balance in the contributed surplus - common share repurchases account is $180,000 and in the contributed surplus - preferred shares account is $50,000. During 20X5, FNR repurchased 30,000 common shares for $900,000.

What amount would be debited to retained earnings as part of the entry made to recognize this transaction?

a) $ 0

b) $ 70,000

c) $120,000

d) $300,000

Question 2: On July 2, 20X4, a publicly accountable entity provided a share appreciation rights (SARs) plan to its employees. A total of 3,000 SARs were awarded. The vesting period expires on July 2, 20X6. The fair value per SAR was $5.80 on July 2, 20X4. The company's year end is December 31.

• At December 31, 20X4, the entity estimated that 80% of the SARS would vest. The fair value per SAR was $6.75.
• At December 31, 20X5, the entity estimated that 75% of the SARS would vest. The fair value per SAR was $5.25.

What is the compensation expense for the year ended December 31, 20X5?

a) $3,713

b) $4,809

c) $6,308

d) $6,750

Question 3: On November 16, 20X3, QNR Inc. declared a cash dividend of $960,000 payable on December 1, 20X3. QNR's capital structure consists of the following:

• 200,000 common shares
• 50,000 cumulative preference shares - Series A; entitled to an annual dividend of $3
• 50,000 non-cumulative preference shares - Series B; entitled to an annual dividend of $5
• Dividends were last paid on December 5, 20X1.

How much of the dividends declared will be paid on the common shares on December 1, 20X3?

a) $160,000

b) $410,000

c) $560,000

d) $640,000

Question 4: On December 31, 20X0, a publicly accountable entity issued $20,000,000, 5%, 10-year convertible bonds for total cash proceeds of $21,650,000. The bonds pay interest semi-annually on June 30 and December 31 each year. The entity incurred a total of $250,000 in transaction costs related to the bond issue (these are not included in the cash proceeds of the bonds). Bonds of similar risk would have yielded 5.4%. Interest rates should be rounded to five decimal places, for example, X.XXXXX%.

What is the total interest expense on these bonds for the six months ended June 30, 20X1?

a) $517,594

b) $523,477

c) $531,825

d) $532,784

Question 5: On January 1, 20X2, Cuppa Corp. granted 1,000 stock options to each of its 300 employees. The options have a three-year vesting period. At the grant date, the fair value of each option was $2.80. Additional information:

• At the end of 20X2, 20 employees have left and Cuppa estimates that an additional 75 will leave in the next two years.
• During 20X3, 30 employees leave and Cuppa estimates that another 50 will leave in the next year.
• During 20X4, 35 employees leave.
• Cuppa follows IFRS and has a December 31 year end.

What amount of compensation expense will Cuppa recognize in 20X3, related to these options?

a) $182,000

b) $228,667

c) $280,000

d) $373,333