EXERCISE 16
EXERCISE 16-13 (15–25 minutes)
1/1/14 No entry (total compensation cost is HK$450,000)
12/31/14 Compensation Expense 225,000 Share Premium—Share Options (HK$450,000 X 1/2) 225,000
12/31/15 Compensation Expense 225,000 Share Premium—Share Options 225,000
5/1/16 Cash (9,000 X HK$20) 180,000 Share Premium—Share Options 405,000* Share Capital—Ordinary (9,000 X HK$5) 45,000 Share Premium—Ordinary 540,000
*(HK$450,000 X 9,000/10,000)
1/1/18 Paid-in Capital—Share Options 45,000 Share Premium—Expired Share Options (HK$450,000 – HK$405,000) 45,000
EXERCISE 17-3 (15–20 minutes)
(a) January 1, 2015
Debt Investments 537,907.40 Cash 537,907.40
(b) Schedule of Interest Revenue and Bond Premium Amortization
12% Bonds Sold to Yield 10%
Date
Cash Received
Interest Revenue
Premium Amortized
Carrying Amount of Bonds
1/1/15
—
—
—
$537,907.40
12/31/15
$60,000
$53,790.74
$6,209.26
531,698.14
12/31/16
60,000
53,169.81
6,830.19
524,867.95
12/31/17
60,000
52,486.80
7,513.20
517,354.75
12/31/18
60,000
51,735.48
8,264.52
509,090.23
12/31/19
60,000
50,909.77*
*9,090.23
500,000.00
*Rounded by 75¢.
(c) December 31, 2015
Cash 60,000.00 Debt Investments 6,209.26 Interest Revenue 53,790.74
(d) December 31, 2016
Cash 60,000.00 Debt Investments 6,830.19 Interest Revenue 53,169.81
EXERCISE 17-17 (15–20 minutes)
(a) December 31, 2015
Equity Investments 125,000,000 Cash 125,000,000
June 30, 2016
Cash 4,000,000 Dividend Revenue (50,000 X ¥80) 4,000,000
December 31, 2016
Cash 4,000,000 Dividend Revenue (50,000 X ¥80) 4,000,000
Fair Value Adjustment 10,000,000 Unrealized Holding Gain or Loss— Income 10,000,000 ¥2,700 X 50,000 = ¥135,000,000 ¥135,000,000 – ¥125,000,000 = ¥10,000,000
(b) December 31, 2015
Equity Investments 125,000,000 Cash 125,000,000
June 30, 2016
Cash 4,000,000 Equity Investments 4,000,000
December 31, 2016
Cash
1/1/14 No entry (total compensation cost is HK$450,000)
12/31/14 Compensation Expense 225,000 Share Premium—Share Options (HK$450,000 X 1/2) 225,000
12/31/15 Compensation Expense 225,000 Share Premium—Share Options 225,000
5/1/16 Cash (9,000 X HK$20) 180,000 Share Premium—Share Options 405,000* Share Capital—Ordinary (9,000 X HK$5) 45,000 Share Premium—Ordinary 540,000
*(HK$450,000 X 9,000/10,000)
1/1/18 Paid-in Capital—Share Options 45,000 Share Premium—Expired Share Options (HK$450,000 – HK$405,000) 45,000
EXERCISE 17-3 (15–20 minutes)
(a) January 1, 2015
Debt Investments 537,907.40 Cash 537,907.40
(b) Schedule of Interest Revenue and Bond Premium Amortization
12% Bonds Sold to Yield 10%
Date
Cash Received
Interest Revenue
Premium Amortized
Carrying Amount of Bonds
1/1/15
—
—
—
$537,907.40
12/31/15
$60,000
$53,790.74
$6,209.26
531,698.14
12/31/16
60,000
53,169.81
6,830.19
524,867.95
12/31/17
60,000
52,486.80
7,513.20
517,354.75
12/31/18
60,000
51,735.48
8,264.52
509,090.23
12/31/19
60,000
50,909.77*
*9,090.23
500,000.00
*Rounded by 75¢.
(c) December 31, 2015
Cash 60,000.00 Debt Investments 6,209.26 Interest Revenue 53,790.74
(d) December 31, 2016
Cash 60,000.00 Debt Investments 6,830.19 Interest Revenue 53,169.81
EXERCISE 17-17 (15–20 minutes)
(a) December 31, 2015
Equity Investments 125,000,000 Cash 125,000,000
June 30, 2016
Cash 4,000,000 Dividend Revenue (50,000 X ¥80) 4,000,000
December 31, 2016
Cash 4,000,000 Dividend Revenue (50,000 X ¥80) 4,000,000
Fair Value Adjustment 10,000,000 Unrealized Holding Gain or Loss— Income 10,000,000 ¥2,700 X 50,000 = ¥135,000,000 ¥135,000,000 – ¥125,000,000 = ¥10,000,000
(b) December 31, 2015
Equity Investments 125,000,000 Cash 125,000,000
June 30, 2016
Cash 4,000,000 Equity Investments 4,000,000
December 31, 2016
Cash