Question

Answers using real data

1. How many treasury shares did HRB hold at April 30, 2018? What was the weighted average cost per treasury share at that date (calculation note: HRB presents amounts in thousands of dollars, but shares at actual)?

1a. What was the amount of HRB’s accumulated other comprehensive income/loss (AOCI) at April 30, 2018? According to footnote 7, what did substantially all of HRB’s AOCI balance represent?

1b. According to ASC 220-10-45-1, what two options are available for reporting comprehensive income?

1c. According to ASC 220-10-45-10A, name three items that would be reported as a component of other comprehensive income. Which (two) items did HRB report as components of its other comprehensive income (nature and 2018 amount)?

1d. What was HRB’s total stockholders’ equity balance as of May 1, 2015? What was the balance as of April 30, 2017? What was the primary contributor to the change during this period?

1e. What type of dividends did HRB declare, and what were the per share amount of those dividends, in 2016, 2017 and 2018? What was the impact to HRB’s retained earnings in 2016, 2017, and 2018?

1f. How many shares did HRB repurchase and retire in 2016, 2017 and 2018? What was the impact to HRB’s various stockholders’ equity accounts as a result of shares repurchased and retired in 2017?

Answer 1

1) Treasury shares did HRB hold at April 30, 2018 - 36,944,789

1) Weighted average cost per treasury share at that date - 717,678,000 / 36,944,789 = $19.4257

1a) The amount of HRB’s accumulated other comprehensive income/loss (AOCI) at April 30, 2018 ($ '000) - (14,303)

The Mojor amount of ($ '000) - (4461) + (4050) + 995 = 7516 Consists of Change in foreign currency translation adjustments.

The remaining consists of Unrealized holding gains (losses) arising during the years = (3530) + (16) +1 = 3545

and Reclassification adjustment for losses (gains) = $ (4982)

1b. According to ASC 220-10-45-1, what two options are available for reporting comprehensive income?

Ans - The Entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.

So Entity has the option to show other comprehensive income part separately.

1c. According to ASC 220-10-45-10A, name three items that would be reported as a component of other comprehensive income. Which (two) items did HRB report as components of its other comprehensive income (nature and 2018 amount)?

Ans- a) Foreign currency translation adjustments - included

b) Unrealized holding gains and losses on available-for-sale securities

c) Gains and losses on intra-entity foreign currency transactions -Included

1d. What was HRB’s total stockholders’ equity balance as of May 1, 2015? What was the balance as of April 30, 2017? What was the primary contributor to the change during this period?

May 1, 2015 - $ 1,832,949

April 30, 2017 - $ (60,883)

The Primary Contributor for change is Repurchase and retirement of common shares.

1e. What type of dividends did HRB declare, and what were the per share amount of those dividends, in 2016, 2017 and 2018? What was the impact to HRB’s retained earnings in 2016, 2017, and 2018?

Cash Dividend declared by HRB. Per share amount $ 0.80, 0.88 and 0.96 per share for 2016, 2017 and 2018 respectively.

HRB retained earnings reduced by $ (201,688) , (187,115) and (200,469) for 2016, 2017 and 2018 respectively.

1f. How many shares did HRB repurchase and retire in 2016, 2017 and 2018? What was the impact to HRB’s various stockholders’ equity accounts as a result of shares repurchased and retired in 2017?

Specifically this information not given but difference between 2017 and 2018 treasury shares can be assumed to be retired. 20,82,784 shares retired in 2018.

The result of repurchase of own shares resulted into deficiency in the year 2017. The Amount of stockholders’ equity accounts reduced because of repurchase of shares.

(Amounts in Brackets represent negative amounts)

(Images from the financial statement are given for your information)