In the Chart Below, Assign the Directional Effect (I =

question 31

Essay

In the chart below, assign the directional effect (I = increase, D = decrease, or NE = no effect) of each of the following six transactions on the components of the book value of common shareholders' equity.
a. Small stock dividend declared and issued.
b. 2-for-1 stock split announced and issued.
c. Stock options granted.
d. Recognition of compensation expense on stock options.
e. Stock options exercised.
f. Stock options expired.
$\begin{array}{c}\begin{array}{|l|}\hline \text {Item}\\\\\hline \text {a.}\\\hline \text {b.}\\\hline \text {c.}\\\hline \text {d.}\\\hline \text {e.}\\\hline \text {f.}\\\hline \end{array}\begin{array}{l|}\hline \text {Common Stock}\\\\\hline\\\hline\\\hline\\\hline \\\hline\\\hline\\\hline\end{array}\begin{array}{l|}\hline \text {Additional Paid-In}\\\text {Capital}\\\hline \\\hline \\\hline\\\hline \\\hline \\\hline \\\hline\end{array}\begin{array}{l|}\hline \text {Deferred}\\\text {Compensation}\\\hline\\\hline \\\hline \\\hline \\\hline\\\hline\\\hline \end{array}\begin{array}{l|}\hline \text {Retained}\\\text {Earrings}\\\hline \\\hline\\\hline \\\hline\\\hline \\\hline \\\hline\end{array}\begin{array}{l|}\hline \text {Treasuiy Stock}\\ \text {at Cost}\\\hline \\\hline \\\hline \\\hline \\\hline \\\hline \\\hline\end{array}\begin{array}{l|}\hline \text {Total Common}\\\text {Shareholders'Equity}\\\hline \\\hline \\\hline \\\hline \\ \hline\\ \hline\\\hline \end{array}\end{array}$

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Definitions:

Initial Public Offering (IPO)

The first sale of stock by a company to the public, marking the transition from a private entity to a public company.

Gross Spread

The difference between the underwriting expense of a security and the amount received from the selling group.

Offering Price

The price at which new shares are offered to the public by an issuer or by shareholders of the company.