Exercise #1: Merliss Company (a specialty boat-accessory manufacturer) is expecting growth in sales of certain low price products. Merliss is thinking about a preferred stock issue to help finance this expansion. The company is leaning toward issuing participating preferred stock so as not to dilute ownership. Investors will get an extra dividend if the company does well. Merliss wants to be sure that all reporting for this transaction is proper and transparent. The company asks you to research disclosure requirements related to its capital structure.

A .Identify the authoritative literature that addresses disclosure of information about capital structure.

B. Find definitions for the following: 1. Securities. 2. Participation Rights 3. Preferred Stock

C. What information about securities must companies disclose? Discuss how Merliss should report the proposed preferred stock issue.

Exercise #2:

A. Access the glossary ("Master Glossary") to answer the following: 1. What is the definition of "basic earnings per share"? 2. What is "dilution"? 3. What is a "warrant"? 4. What is a "grant date"? B. For how many periods must a company present EPS data? C. For each period that an income statement is presented, what must a company disclose about its EPS? D. If a company's outstanding shares are increased through a stock dividend or a stock split, how would that alter the presentation of its EPS data?