With corporate offices in Quebec, RONA Inc. operates approximately 700 stores of various sizes and formats across Canada and is the largest Canadian distributor and retailer of hardware, renovation, and gardening products. Exhibit 11-9 presents the shareholders€™ equity section of the balance sheet the statement of retained earnings, and excerpts from Notes 20 and 21 from RONA€™s consolidated financial statements for 2009. All amounts are in thousands.
In Exhibit 11-9
CONSOLIDATED FINANCIAL STATEMENTS
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Required:
a.
i. How many types of shares does RONA have authorized?
ii. What are the main differences in the types?
iii. Why would a company have different types of shares authorized?
b. Are there any preferred shares outstanding?
c. Explain all of the changes in retained earnings in 2009.
d.
i. Why do companies have share option plans for their employees?
ii. Explain why compensation cost appears to be recorded in contributed surplus.
iii. What method does RONA use to estimate the fair value of its stock option plans?
iv. What is the likely reason that there is no compensation expense related to the May 1, 2002, plan that was expensed in 2008 and 2009?

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2008 Restated-Note 2 Shareholders' equity Capital stock (Note 20) Retained earnings Contributed surplus S 603,756 1,161,808 13,475 1,779,039 S 426,786 1,028,876 12,563 1,468,225 $ 2,478,918 S 2,749,883