The Income Statement for Dibble Company for the Year Ended

question 157

Essay

The income statement for Dibble Company for the year ended December 31, 2010 appears below.
*Includes $20,000 of interest expense and $22,000 of income tax expense.
Additional information:
1. Common stock outstanding on January 1, 2010 was 50,000 shares. On July 1, 2010, 10,000 more shares were issued.
2. The market price of Dibble's stock was $12 at the end of 2010.
3. Cash dividends of $30,000 were paid, $6,000 of which were paid to preferred stockholders.
Instructions
Compute the following ratios for 2010:
(a) earnings per share.
(b) price-earnings.
(c) times interest earned.

Discern the purpose and accounting treatments for purchasing debt or equity securities.

Identify accounting treatments at acquisition for different types of investments.

Distinguish between strategic and non-strategic investments, and their associated purposes.

Understand the accounting models applicable to equity and debt investments, including the fair value through profit and loss and the amortized cost model.

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Definitions:

Electrical Conductivity

A measure of how well a material allows the flow of electric current through it.

Valence Shell

Outermost orbital shell in an atom. The number of electrons in the valence plays a role in defining the electrical and physical characteristics of an element.

Chemical Properties

Characteristics of a substance that dictate how it reacts with other substances to form new products.

Electrical Resistance

The measure of the difficulty electrons face in flowing through a conductor, resulting in heat generation and energy dissipation.