Page 519 - Accounting Principles (A Business Perspective)

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Pursue choices on the screen until you locate the consolidated statement of stockholders' equity. You will
probably go down some "false paths" to get to this financial statement, but you can get there. This experience is all

part of learning to use the Internet. Note the changes that have occurred in the Common Stock, Additional Paid-In
Capital, and Retained Earnings accounts. Check out the notes to the financial statements for further information.
Write a memo to your instructor summarizing your findings.
Visit the following website for Gartner Group:
http://www.gartner.com
Pursue choices on the screen until you locate the consolidated statement of stockholders' equity. You will
probably go down some "false paths" to get to this financial statement, but you can get there. This experience is all

part of learning to use the Internet. Trace the changes that have occurred in the last three years in the Common
Stock account. Check out the notes to the financial statements for further information. Write a memo to your
instructor summarizing your findings.
Answers to self-test
True-false
False. This is not the primary reason a person may prefer the corporate form of business organization in a

situation involving considerable risk. The primary reason is that stockholders can lose only the amount of capital
they have invested in a corporation.
False. The claims of the creditors rank ahead of the claims of the stockholders, even those stockholders whose
stock is preferred as to assets.
True. Par value is simply the amount per share that is credited to the Capital Stock account for each share
issued and is no indication of the market value or the book value of the stock.
True. When capital stock is issued for property or services, the transaction is recorded at the fair market value

of (1) the property or services received or (2) the stock issued, whichever is more clearly evident.
Multiple-choice
c. This feature of corporations is one of the disadvantages of the corporate form of organization.
b. Stated value is an arbitrary amount assigned by the board of directors to each share of capital stock without a
par value.
d. Dividends in arrears are cumulative unpaid dividends. Only cumulative preferred stock has dividends in
arrears.
b. The amount credited to the Paid-In Capital in Excess of Par Value—Common is computed as follows:
10,000sharesXUSD50−USD20=USD300,000

a. The book value of common stock is computed as follows:
Total book value of stockholders'
equity
($80,000 + $200,000 + $400,000) $680,000
Total shares ÷1,000
Book value per share $ 680

Accounting Principles: A Business Perspective 520 A Global Text