Question

Barney Corporation recognized a $100 million preferred stock balance on 12/31/2019. On January 1, 2020, Barney issued $10 million in preferred dividends. On the same date, Barney raised an additional $20 million via a new issuance of preferred stock. On December 31, 2020, the market value of the original amount of preferred shares rose $5 million. Under US GAAP, the 12/31/2020 year ending preferred stock balance is:

Answer 1

Answer:

Under US GAAP, the 12/31/2020 year ending preferred stock balance is $120 million

Explanation:

The computation of year ended preferred stock is shown below:

= Beginning balance of preferred stock + new issuance of preferred stock

= $100 million + $20 million

= $120 million

The preferred dividend and market value of the original amount of preferred shares are not considered in the computation part. Thus, it is ignored.

Hence, Under US GAAP, the 12/31/2020 year ending preferred stock balance is $120 million