MULTIPLE CHOICE EXERCISES:
CHAPTER 9-EXERCISE 7: PANDORA CORP
Share
Share premium premium 742,500742,500
CHAPTER 9-EXERCISE 7: PANDORA CORP.
CHAPTER 9-EXERCISE 7: PANDORA CORP.
1. Ans. B.
1. Ans. B.
The share options are under a variable option plan with a market based condition, thus the achievability of the condition is not a matter to consider in determining annual salaries expense:
2014:
Number of options: (600-5-45)*100 55,000
Fair value of options on grant date P5 Estimated value of services over 3 years P275,000
Divide by: Vesting period 3 years
Number of options: (600-5-20-35)*100 54,000 Fair value of options on grant date P5 Estimated value of services over 3 years P270,000
Multiply by: 2/3 2/3
A
Accccuummuullaatteed d ssaallaarriiees s eexxppeennsse e aas s oof f 22001155 PP118800,,000000 Less: Prior years’ salaries expense (91,667) S
Saa llaa rriiees s eexxppeennssee, , 22001155 PP8888,,333333 Ordinary share options outstanding
(22,500*18)
AUDITING (2016 EDITION) AUDITING (2016 EDITION) CTESPENILLA
CHAPTER 9: AUDIT OF STOCKHOLDERS' EQUITY CHAPTER 9: AUDIT OF STOCKHOLDERS' EQUITY 4. Ans. A.
4. Ans. A.
2016:
Final number of options: (600-5-20-30)*100 54,500 Fair value of options on grant date P5 Final value of services over 3 years P272,500
Multiply by: 3/3 3/3
Accumulated salaries expense as of 2016 P272,500 Less: Prior years’ salaries expense (180,000) S
Saa llaa rriiees s eexxppeennssee, , 22001166 PP9922,,550000
CHAPTER 9-EXERC
CHAPTER 9-EXERCISE 8: ISE 8: JUBEE CORP.JUBEE CORP.
1. Ans. B.
1. Ans. B.
The share options are under a variable option plan with a non-market based condition, thus:
2014:
Condition achievable if Sales Vol. Inc.>=5%; Estimated Sales Vol. Inc. 12% – achievable.
Number of options: (100*80%)*200 16,000
Fair value of options on grant date P40 Estimated value of services over 3 years 640,000
Divide by: Vesting period 3 years
Condition achievable if Sales Vol. Inc.>=5%; Estimated Sales Vol. Inc. (12+20+20)/3=17.3% – achievable.
Number of options: (100*85%)*300 25,500
Fair value of options on grant date P40 Estimated value of services over 3 years 1,020,000
Multiply by: 2/3 2/3
Accumulated salaries expense as of 2015 P680,000 Less: Prior years’ salaries expense (213,333) S
Saa llaa rriiees s eexxppeennssee, , 22001155 PP446666,,666677 3. Ans. D.
3. Ans. D.
2016:
Condition achieved if if Sales Vol. Inc.>=5%; Estimated Sales Vol. Inc. (12+20+16)/3=16% – achived.
Final number of options: (100-14)*300 25,800 Fair value of options on grant date P40 Final value of services over 3 years P1,032,000
Multiply by: 3/3 3/3
Accumulated s alaries expense as o f 2 016 P1,032,000 Less: Prior years’ salaries expense (680,000.0) S
Saa llaa rriiees s eexxppeennssee, , 22001166 PP335522,,000000 4. Ans. A.
4. Ans. A.
Entry upon exercise of 60% of the options (25,800*60% = 15,480 options):
Cash (15,480*P120) 1,857,600
Ordinary share options outstanding
(15,480*40) 619,200
Ordinary shares (15,480*P100) 1,548,000
Share
Share premium premium 928,800928,800
5. Ans. B.
5. Ans. B.
Entry upon expiration of 40% of the options (25,800*40% = 10,320 options):
Ordinary share options outstanding
(10,320*40) 412,800
ShShaarre e pprreemmiiuum m – – EExxppiirreed d ooppttiioonnss 441122,,880000
CHAPTER 9-EXERC
CHAPTER 9-EXERCISE 9: ISE 9: KALINGA CO.KALINGA CO.
1. Ans. A.
1. Ans. A.
The share appreciation rights are under a variable plan with a non-market based condition, thus:
2014:
Condition is achievable if Ave Rev Growth >=10%; Estimated Ave Rev Growth, 12.5% – achievable.
Estimated number of SAR: (20-4)*10,000 160,000 Estimated FMV of SAR at year-end P6 Estimated value of services over 3 years P960,000
Divide by: Vesting period 3 years
Condition is achievable if Ave Rev Growth >=10%; Estimated Ave Rev Growth, 12.5% – achievable Estimated number of SAR: (20-4)*10,000 160,000
Estimated FMV of SAR at year-end P6.75 Estimated value of services over 3 years P1,080,000
Multiply by: 2/3 2/3
Accumulated salaries expense as of 2015 P720,000 Less: Prior years’ salaries expense (320,000) S
Saa llaa rriiees s eexxppeennssee, , 22001155 440000,,000000 3. Ans. B; 4 Ans. D.
3. Ans. B; 4 Ans. D.
2016:
Condition is achieved if Ave Rev Growth >=10%; Actual Ave Rev Growth (10+15+25)/3=16.7% – achieved.
Final number of SAR 15*20,000 300,000 Fair value of options on grant date P7 E
Esstt. . vvaalluue e oof f sseerrvviicc ees s oovveer r 3 3 yyeeaarrss PP22,,110000,,000000
Multiply by: 3/3 3/3
Accumulated s alaries expense as o f 2 016 P2,100,000 Less: Prior years’ salaries expense (720,000) S
Saa llaa rriiees s eexxppeennssee, , 22001166 PP11,,338800,,000000
AUDITING (2016 EDITION) AUDITING (2016 EDITION) CTESPENILLA
CHAPTER 9: AUDIT OF STOCKHOLDERS' EQUITY CHAPTER 9: AUDIT OF STOCKHOLDERS' EQUITY CHAPTER 9-EXERC
CHAPTER 9-EXERCISE 10: ISE 10: SANS CORP.SANS CORP.
CORRECT ENTRIES:
Land (1.8M*30%) 540,000
Building (1.8M*70%) 1,260,000
Ordinary Shares 500,000
Share premium 1,300,000
Subsription receivable 420,000
Ordinary shares subscribed 200,000
Share premium 220,000
Treasury shares (5,000 sh) 125,000
C ash 125,000
Cash 252,000
Subscription receivable 252,000
Ordinary share subscribed 120,000
Ordinary shares 120,000
MEMO: SPLIT: 62,000 shares into 248,000 shares; P10 par value to P2.50 par 8,000 shares subs into 32,000 shares subs; P21 subs price to P5.25 subs price 5,000 TS into 20,000 TS; P25 cost per unit to P6.25 cost per unit
Cash 40,000
RE 22,500
Treasury shares (10,000*6.25) 62,500
2. Ans. C.
2. Ans. C.
Compensation expense 84,000
SSAAR PPaR ayyaabbllee 8844,,000000 (7*4,000*P15)/5years
3. Ans. C.
3. Ans. C.
RE 270,000
Cash Dividends Payable 270,000
Shares Outstanding 238,000
Shares Subscribed 32,000
Total 270,000
Multiply by cash div rate 1 T
Toottaa l l CCaa ssh h ddiivviiddeennddss 227700,,000000
Income Summary 1,500,000
R E 1,500,000
Summary OS OS-Subs Share Prem. RE TS TOTAL
January 15, 500,000 1,300,000
March 1, 200,000 220,000
June
1, (125,000)
July 15, 120,000 (120,000)
September 2, (22,500) 6 2,500
December 30, (270,000)
December 31, 1,500,000
Appropriation for TS (62,500)
A
Addjj. . BBaallaanncceess 662200,,000000 80,000 1,1,52520,0,000000 1,1,14145,5,000000 (62,500) 3,365,0003,365,000 1
1. . AAnnss. . BB.. 44. . AAnnss. . CC.. 55. . AAnnss. . CC 6. 6. AAnnss. . DD..
CHAPTER 9-EXERC
CHAPTER 9-EXERCISE 11: ISE 11: ROXXY CORP.ROXXY CORP.
1. Ans. D.
1. Ans. D.
Ordinary Sh. Sh Prem - OS Sh Prem- TS reasury Share Shares Outstanding Prior to 2013:
A. Share issue for cash 3,800,000 7,980,000 380,000
B. Share issue for land 200,000 680,000 20,000
C. Share subsription/issue 400,000 1,280,000 40,000
D. Cash dividend declaration (Dec. 15, 2012) 440,000
2013 transactions:
A. Cash dividend declaration (June 15, 2013) 440,000
B. Share issue for cash 80,000 288,000 8,000
C. Reacquisition of Treasury Shares 312,000 (8,000)
D. Stock Dividend Declaration 220,000 924,000 22,000
462,000
Share premium - OS 11,152,000 Share premium - Treasury-OS 6,000 T
Toottaa l l SShhaarre e pprreemmiiuumm 1111,,115588,,000000 3. Ans C.
3. Ans C.
Retained earnings, June 30, 2013 2,760,000 Net Income for 2014 fiscal year 160,000 Stock Dividends to OS (Dec. 2013)
(440,00sh*5%*P52) (1,144,000)
Cash Dividends to PS (Dec. 2013)
( 200,000*P1) (200,000)
Voluntary approp. for sinking fund (200,000) Legal approp. for treasury shares (equal to cost) (234,000) Ret
Retainained eared ear ninningsgs, unap, unap propropripriateated June 30d June 30 , 2014, 2014 1,11,142,42,000000
AUDITING (2016 EDITION) AUDITING (2016 EDITION) CTESPENILLA
CHAPTER 9: AUDIT OF STOCKHOLDERS' EQUITY CHAPTER 9: AUDIT OF STOCKHOLDERS' EQUITY 4. Ans. A.
4. Ans. A.
Ordinary Shares 4,700,000
Preference Shares 5,000,000
Share Premium - OS 11,152,000
Share Premium - PS 3,800,000 Share Premium - Treasury (OS) 6,000
RE, appropriated 434,000
RE, unappropriated 1,142,000
Treasury Shares at cost (234,000) T
Toottaa l l SSHHEE, , JJuunne e 3300, , 22001144 2266,,000000,,000000
CHAPTER 9-EXERCIS
CHAPTER 9-EXERCISE 12: E 12: GLORIA CORPORATIONGLORIA CORPORATION