Corporations sometimes distribute assets other than cash when paying a dividend. Which of the following is/are true?
a. Such a dividend is known as a dividend in kind or a property dividend.
b. The accounting for property dividends resembles that for cash dividends, except that when the firm pays the dividend, it credits the asset given up, rather than Cash.
c. The amount debited to Retained Earnings equals the fair value of the assets distributed.
d. When this fair value differs from the carrying value of the assets distributed, the firm recognizes a gain or loss in net income.
e. all of the above
E
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Write a user-defined function to calculate the required return on common stocks (kCS) using the H-Model as defined by (9-8) on page 264. The formula is:
1. The function should be named HModelCostEquity, and will need to accept six arguments: the initial growth rate (g1), the period of time that dividends will grow at this initial rate (n), the dividend growth rate for the remainder of time (g2), the length of the transition phase (T), the last dividend payment (D0), and the price of the share of stock today (VCS).
2. Use the function to find the solution given the following data: the last dividend payment is $0.80; the initial growth rate is 6% during the first three years. This growth rate will decline to 3% and will become constant in year 6 (T = 3 years). The price of the stock is $12.75.
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Indicate whether the statement is true or false
A bond selling at a discount will have a built-in capital gain if the bond is held to maturity
Indicate whether the statement is true or false
On December 31, Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000. The insurance was purchased on July 1 of the same year for one year of insurance coverage, with coverage beginning on that date. Assuming adjustments are only made at year-end, the adjusting entry needed on December 31 is:
A. Debit Insurance Expense $3,000; credit Prepaid Insurance $3,000. B. Debit Prepaid Insurance $6,000; credit Cash $6,000. C. Debit Insurance Expense $3,000; credit Accounts Payable $3,000. D. Debit Insurance Expense $6,000; credit Accounts Payable $6,000. E. Debit Cash $6,000; credit Prepaid Insurance $6,000.