1.

2.

3.

4.

5.

Assume there are two dilutive convertible securities. The one that should be used first to recalculate earnings per share is the security with the a) greater earnings adjustment. b) greater earnings per share adjustment. c) smaller earnings adjustment. d) smaller earnings per share adjustment. Quirk Corporation issued a 3-for-2 stock split of its common stock which had a par value of $10 before the dividend. At what amount should retained earnings be capitalized for the additional shares issued? a) There should be no capitalization of retained earnings. b) Par value c) Fair value on the declaration date d) Fair value on the payment date A convertible bond issue should be included in the diluted earnings per share computation as if the bonds had been converted into common stock, if the effect of its inclusion is Dilutive Antidilutive a) Yes No b) Yes Yes c) No No d) No Yes Investments in debt securities available for sale are reported at: a) Future value. b) Lower of cost or market. c) Historical cost. d) Fair value on the reporting date. In computing the present value of the lease payments, the lessee should a) use its incremental borrowing rate in all cases. b) use the implicit rate of the lessor, assuming that the implicit rate is known to the lessee. c) use the implicit rate in all cases. d) use both its incremental borrowing rate and the implicit rate of the lessor, assuming that the implicit rate is known to the lessee