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# depreciation expense

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I need answers for these questions to compare to what I have.

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1. Presented below is information related to ABC Corporation:
4300000+550000+2000000+400000+1500000-150000=8600000
a. \$8,600,000.

2. How should a "gain" from the sale of treasury stock be reflected when using the cost method of recording treasury stock transactions?
Debit: Cash
Credit: Treasury stock
Credit: Paid-in capital - Treasury stock
b. As paid-in capital from treasury stock transactions.

3. ABC Corporation owned 900,000 shares of XYZ Corporation stock. On December 31, 2007, when ABC's account "Investment in Common Stock of XYZ Corporation" had a carrying value of \$5 per share, ABC distributed these shares to its stockholders as a dividend. ABC originally paid \$8 for each share. XYZ has 3,000,000 shares issued and outstanding, which are traded on a national stock exchange. The quoted market price for a XYZ share was \$7 on the declaration date and \$9 on the distribution date.
What would be the reduction in ABC's stockholders' equity as a result of the above transactions?
At declaration date, the following is recorded
Debit: Retained earnings (\$5x900000)
Credit: Dividends payable
The amount to be distributed is the carrying value of the investment since the company did not realize any gain or loss from the transaction
b. \$4,500,000.

4. ABC Company has 350,000 shares of \$10 par value common stock outstanding. During the year, ABC declared a 10% stock dividend when the market price of the stock was \$30 per share. Four months later ABC declared a \$.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by:
Stock dividend 350000*10% = 35000 => small stock dividend hence, retained earnings is debited for the market value of the stock = 35000x30=1050000
Cash dividends = (350,000+35000)*0.50=192,500
Total debit to RE=192,500+1050000=1242500
a. \$1,242,500.

5. The rate of return on common stock equity is calculated by dividing:
(Net income - dividends to preferred)/CSHE

a. net income less preferred dividends by average common stockholders' equity.

6. ABC Corporation offered detachable 5-year warrants to buy one share of common stock (par value \$5) at \$20 (at a time when the stock was selling for \$32). The price paid for 200, \$1,000 bonds with the warrants attached was \$205,000. The market price of the ABC bonds without the warrants was \$180,000, and the market price of the warrants without the bonds was \$20,000. What amount should be allocated to the warrants?
20000/(20000+180000)*205000=20500
b. \$20,500

7. Compensation expense resulting from a compensatory stock option plan is generally:
c. allocated to the periods benefited by the employee's required service.
Source: ...

#### Solution Summary

Depreciation expenses are evaluated.

\$2.19