Corporation A decides to borrow $1,000,000 and use the money to buy back $1,000,000 of its
common stock.
The corporation pays 6% interest on its borrowed funds which exactly equals the
amount of the dividend it used to pay on the common stock it repurchased. Therefore,
A) Corporation A's net income will increase due to the tax deductibility of interest expense.
B) Corporation A's gross profit will decrease.
C) Corporation A will have no change in its operating income since the interest expense exactly
offsets the prior dividend payment.
D) Corporation A's operating income will decrease due to higher interest expense.
A
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All of the following situations require a retrospective application of a change in a reporting entity except for:
A. Changing entities that are included in combined financial statements. B. Changing the specific subsidiaries that make up a consolidated entity. C. Presenting foreign subsidiaries in addition to domestic subsidiaries. D. Presenting consolidated financials rather than individual statements for separate entities.
Osbourne, Inc. issued 60,000 shares of common stock in exchange for manufacturing equipment. The equipment has a fair value of $1,420,000. The stock has a par value of $0.05 per share. The journal entry to record this transaction includes a ________
A) debit to Cash for $14,170,000 B) credit to Gain on Sale of Common Stock for $1,480,000 C) credit to Paid-In Capital in Excess of Par-Common for $1,417,000 D) credit to Common Stock-$0.05 Par Value for $1,420,000
The 2004 Heath Information and Portability and Accountability Act (HIPPA):
a. requires consent for medical information to be accessed and shared. b. prohibits discriminatory use of pre-employment medical tests. c. prohibits employers from requesting genetic information as part of a post-offer medical exam. d. All of these statements are true.
________ represent current investor expectations about a firm whereas ________ are representations of historical costs
A) Book values; market values B) Market values; book values C) Regulators; investment bankers D) Common equity holders; bondholders