66 on may 1 2017 durban should credit contributed surplus stock warrants for a 35 00 4314594

66.On May 1, 2017, Durban should credit Contributed Surplus—Stock Warrants for

a) $35,000.

b) $20,000.

c) $15,000.

d) $ 0.

67.Lagos Inc. issued bonds with detachable warrants for $5,000,000 (par value). The bonds have a present value of $4,934,400. The fair value of the warrants is determined to be $220,000. Using the relative fair value method, how much of the issue price should be allocated to the warrants?

a) $ 65,600

b) $211,200

c) $213,500

d) $220,000

68.On July 1, 2017, Juba Inc. issued 10,000, $7 non-cumulative, no par value preferred shares for $1,050,000. Attached to each share was one detachable warrant, giving the holder the right to purchase one of Juba’s no par value common shares for $30.At this time, the shares without the warrants would normally sell for $1,025,000, while the market price of the warrants was $2.50 each. On October 31, 2017, when the market price of the common shares was $19 and the market value of the warrants was $3.00, 4,000 warrants were exercised. Juba adheres to IFRS.As a result of the exercise of the warrants and the issuance of the related common shares, what journal entry would Juba make?

a) Cash…………………………………………..120,000

Common Shares………………………………..120,000

b) Cash…………………………………………..120,000

Contributed Surplus—Stock Warrants…………………..10,000

Common Shares………………………………..130,000

c) Cash…………………………………………..120,000

Contributed Surplus—Stock Warrants…………………..25,000

Common Shares………………………………..145,000

d) Cash…………………………………………..120,000

Contributed Surplus—Stock Warrants…………………..15,000

Common Shares………………………………..135,000

69.Bissau Ltd. issued $4,000,000, 5-year, 8% convertible bonds at par. Each $1,000 bond is convertible to 200 of Bissau’s no par value common shares, which are currently trading at $25 each. The current market rate for similar non-convertible bonds is 10%. Assuming Bissau adheres to IFRS, the value to be recorded for the conversion option is

a) $ 0.

b) $ 5,000.

c) $100,000.

d) $303,267.

70. On January 1, 2017, Orion Corp. granted an employee an option to purchase 5,000 of Orion's no par value common shares at $50 per share. The Black-Scholes option pricing model determined total compensation expense to be $220,000. The option became exercisable on December 31, 2018, after the employee completed two years of service. The market prices of Orion's shares were as follows:

January 1, 2017$40

December 31, 2018$52

For calendar 2018, Orion should recognize compensation expense of

a) $ 0.

b) $ 50,000.

c) $110,000.

d) $250,000.

71.On January 1, 2015, Tunis Inc. granted stock options for 50,000 of its no par value common shares to key employees, at an option price of $25. On that date, the market price of the common shares was $23. The Black-Scholes option pricing model determined total compensation expense to be $375,000. The options are exercisable beginning January 1, 2018, providing the key employees are still employed by Tunis at the time the options are exercised. The options expire on January 1, 2019.On January 2, 2018, when the market price of the shares was $29 per share, all 50,000 options were exercised. The amount of compensation expense Tunis should have recorded for calendar 2016 is

a) $ 0.

b) $ 50,000.

c) $125,000.

d) $187,500.

72.On June 30, 2015, Kinshasa Corp. granted stock options for 30,000 of its no par value common shares to key employees, at an option price of $36. On that date, the market price of the common shares was $32. The Black-Scholes option pricing model determined total compensation expense to be $720,000. The options are exercisable beginning January 1, 2018, providing the key employees are still employed by Kinshasa at the time the options are exercised. The options expire on June 30, 2019.On January 2, 2018, when the market price of the shares was $42, all 30,000 options were exercised. The amount of compensation expense Kinshasa should have recorded for calendar 2017 is

a) $120,000.

b) $288,000.

c) $360,000.

d) $720,000.

73.On December 31, 2015, in order to retain certain key executives, Entebbe Corporation granted them stock options. 25,000 options were granted at an option price of $40 per share. Market prices of the shares were as follows:

December 31, 2016$35 per share

December 31, 2017$39 per share

The options were granted as compensation for services to be rendered over a two-year period beginning January 1, 2016. The Black-Scholes option pricing model determined total compensation expense to be $500,000. The amount of compensation expense Entebbe should have recorded for calendar 2017 is

a) $250,000.

b) $500,000.

c) $875,000.

d) $1,000,000.

Use the following information for questions *74–*76.

On January 1, 2016, Luanda Ltd. established a stock appreciation rights plan for its executives. This plan entitles them to receive cash at any time during the next four years for the difference between the market price of its common shares and a pre-established price of $20, on 50,000 SARs. Market prices of the shares are as follows:

January 1, 2016$35 per share

December 31, 2016$38 per share

December 31, 2017$30 per share

December 31, 2018$33 per share

Compensation expense relating to the plan is to be recorded over a four-year period beginning January 1, 2016.

74.What amount of compensation expense should Luanda recognize for calendar 2016?

a) $150,000

b) $187,500

c) $225,000

d) $900,000

75.What amount of compensation expense should Luanda recognize for calendar 2017?

a) $0

b) $ 25,000

c) $125,000

d) $250,000

76.On December 31, 2018, 8,000 SARs are exercised by executives. What amount of compensation expense should Luanda recognize for calendar 2018?

a) $65,000

b) $162,500

c) $237,500

d) $487,500

77. On January 2, 2017, for past services rendered, Zeus Corp. granted Joanna Wood, its president, 18,000 stock appreciation rights that are exercisable immediately and expire on January 2, 2018. On exercise, Wood is entitled to receive cash for the excess of the market price of the shares on the exercise date over the market price on the grant date. Wood did NOT exercise any of the rights during 2017. The market price of Zeus's shares was $35 on January 2, 2017, and $45 on December 31, 2017. As a result of the stock appreciation rights, Zeus should recognize compensation expense for 2017 of

a) $0.

b) $180,000.

c) $630,000.

d) $810,000.