Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition
CHAPTER 15
SHAREHOLDERS’ EQUITY
EXERCISE 15-3 (10-15 minutes)
(a)
1. Cash [(6,000 X $30) – $2,000]......................... 178,000
Common Shares...................................... 178,000
2. Land (3,750 X $32) .......................................... 120,000
Common Shares...................................... 120,000
Note: The market value of the share ($120,000) is used to
value the exchange because it is a more objective measure
than the appraised value of the land ($140,000).
3. Common Shares (500 X $38).......................... 19,000
Contributed Surplus ............................... 4,500
Cash (500 X $29)......................................14,500
(b) Share repurchases are recorded at the average issue price
per share, or the average price at which the shares were
issued for that class of shares. The original issue price of
the individual shares being repurchased is not used. The
original issue price of the individual shares repurchased
would be considered in the total issue price for the class of
shares but would be averaged with all other shares of the
same class.
Solutions Manual 15-1 Chapter 15
Copyright © 2011 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited. Kieso, Weygandt, Warfield, Young, WiecIntermediate Accounting, Ninth Canadian Edition
EXERCISE 15-6 (20-30 minutes)
(a) Preferred Common Total
Dividends in arrears (1) $250,000 $250,000
Current year dividend (2) 125,000 $180,000 305,000
Participating dividend (3) 25,000 60,000 85,000
Total $400,000 $240,000 $640,000
(1) Dividends in arrears: 25,000 X $5 X 2 = $250,000
(2) Current year dividend:
Preferred: 25,000 X $5 = $125,000
Common: Number of shares issued 60,000
X $3
$ 180,000
(3) Participating dividend:
Since the common shareholders have received a $4 per
share dividend, $1 per share is in excess of the $3 dividend
per share participation threshold.
Excess dividend $1
Number of common shares outstanding X 60,000
Excess total dividend $60,000
Common share capital
$1,800,000
Excess return 3.33%
Apply excess return to preferred
shareholders’ capital X $750,000
Participating dividend to preferred
Shareholders $25,000
Solutions Manual 15-2 Chapter 15
Copyright © 2011 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited. Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition
EXERCISE 15-6 (Continued)
(b) Retained Earnings ....................................9 .....................
Common Stock Dividend
Distributable...................................................... 5,000
(60,000 X 15% X $105)
(c) Common Shares .......................................3 .....................
Contributed Surplus .................................7 .....................
Cash (10,500 X $105) .......................................1 ..... 2,500
($1,800,000 / 60,000 X 10,500
= $315,000)
Solutions Manual 15-3 Chapter 15
Copyright © 2011 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited. Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition
EXERCISE 15-14 (30-35 minutes)
(a) 1. Dividends Payable—Preferred
(2,000 X $8) ............................................,.................
Dividends Payable—Common
(25,000 X $3) ...........................................,.................
Cash................................................................00
2. Common Shares.......................................1 ...,.................
Contributed Surplus...............................1 .....,.................
Cash (3,700 X $35).........................................1 .......00
($100,000 / 25,000 X 3,700 = $14,800)
3. Cash (1,000 X $105)................................1 .....,.................
Preferred Shares ...........................................1.......00
4. Retained Earnings....................................9 ...,.................
Common Stock Dividend
Distributable...................................................50
[(25,000 – 3,700) X 10% = 2,130 X $45]
5. Common Stock Dividend
Distributable.........................................,.................
Common Shares..............................................9 ......50
6. Retained Earnings....................................7 ...,.................
Dividends Payable—Preferred
(3,000 X $8) .........................................
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