Question

1. Common shares are issued in exchange for a noncash asset. Under IFRS, the noncash asset should be recorded at:

1. The average cost of the common shares in the common shares account
2. The fair market value of the shares
3. The fair market value of the asset acquired
4. The fair market value of the asset acquired or the fair market value of the common shares if the fair market value of the asset cannot be reliably determined

               

2. What is the cumulative effect of the declaration and payment of a cash dividend on a company’s financial statements?

1. To decrease total liabilities and shareholders’ equity
2. To increase total expenses and total liabilities
3. To increase total assets and shareholders’ equity
4. To decrease total assets and shareholder’s equity

3. What is the journal entry to record the issuance of 1,000,000 common shares for $8 each and 250,000, $2.50 preferred shares for $50 each?

1. Cash                                                                8,875,000

                 Common Shares                                                                   8,000,000

                 Preferred Shares                                                                      875,000

2. Cash                                                                  8,625,000

                 Common Shares                                                                   8,000,000

                 Preferred Shares                                                                      625,000

3. Cash                                                                  8,000,000

                 Common Shares                                                                   8,000,000

4. Common Shares                                             8,000,000

Preferred Shares                                                875,000

                 Cash                                                                                       8,875,000

4. The liability for a cash dividend is recorded on which of the following dates?

1. Date of record
2. Date of payment
3. Year-end date
4. Date of declaration

5. On January 1^st, 2019, Hanson Corporation has 15,000, $2.60 cumulative preferred shares and 20,000 common shares. Hanson did not pay any dividends during the previous year ended December 31^st, 2018. The company pays $45,000 of dividends during 2019. Which of the following amounts represents the amount of dividends that the preferred shareholders would receive in 2019?

1. $45,000
2. $39,000
3. $15,000
4. $6,000

6. Which of the following best describes the authorized shares of a corporation?

1. They must be recorded in a formal accounting entry
2. They have an effect on both assets and shareholders’ equity
3. Authorized share capital is required to be shown on a corporation’s financial statements under both ASPE and IFRS
4. They are indicated in a corporation’s articles of incorporation

7. What is total shareholders’ equity based on the following account balances?

Common Shares                           $450,000

$2.25 Preferred Shares                    90,000

Retained Earnings                           190,000

Dividends Payable                             10,000                         

1. $740,000
2. $730,000
3. $720,000
4. $640,000

8. Which of the following would result in a credit to retained earnings?

1. Loss for the period
2. Dividend declaration
3. Dividend payment
4. Profit for the period

9. Based on the following information, calculate return on equity ( round to two decimal places ).

Number of Issued Common Shares                     #30,000

Number of Issued Preferred Shares                    #100,000

Profit for the year                                                   $76,000

Average Shareholders’ Equity for the year        $262,300

1. 2.02
2. 0.29
3. 0.50
4. 3.45

10. Turpin Ltd. reported retained earnings of $725,000 on its March 31, 2019 balance sheet.

It reported a profit of $260,000 for the year ended March 31, 2020. Its retained earnings at March 31, 2020 was $865,000. Which of the following amounts represents the dividends declared by Turpin during the year ended March 31, 2020? ( assume no other effects on retained earnings during the year )

1. $120,000
2. $400,000
3. $465,000
4. $985,000

Answer 1

Answer(1)

Option (D) is the correct answer.

The fair market value of the asset acquired or the fair market value of the common shares if the fair market value of the asset cannot be reliably determined.

Answer(2)

Option (D) is the correct answer.

To decrease total assets and shareholders’ equity .

Answer(3)

Option (B) is the correct answer.

Date	Accounts & Explanations	Debit	Credit
	Cash	$8,625,000
	Common Shares		$8,000,000
	Preferred Shares		$625,000

Answer(4)

Option (D) is the correct answer.

Date of declaration

Answer (5)

Option (A) $45,000 is the correct answer.

Reason : Total dividend for two years is $2.60*2*15,000 shares is $78,000.so whole dividend goes to preferred shareholders.

Answer (6)

Option (D) is the correct answer.

They are indicated in a corporation’s articles of incorporation .

Answer (7)

Option (D) is the correct answer.

Total shareholders equity = Common Shares + Retained Earnings

                                        =   $450,000 +$190,000

                                        = $640,000

Answer (8)

Option (D) is the correct answer.

Profit for the period would result in a credit to retained earnings .

Answer (9)

Option (B) is the correct answer.

Return on Equity = Profit for the year / Average Shareholders’ Equity for the year

                        = $76,000 / $262,300

                         =0.29

Answer (10)

Option (A) is the correct answer.

Calculation of Dividend Paid:

Dividend Paid= Beginning Retained Earnings + Net Income - Ending Retained Earnings

                   = $725,000 + $260,000 - $865,000

                   =$120,000