Jimmy Fu and Moog Inc Understanding Shareholders Equity Brief Case

Jimmy Fu and Moog Inc Understanding Shareholders Equity Brief Case

Excel Calculations

 Balance Sheet Extracts

Common Stock

Class A

Class B

Additional Paid-in Capital

Retained Earnings

Treasury Shares (Class A)

Treasury Shares (Class B

Accumulated Other Income

Total Share holder's Equity

Outstanding Class A Shares

Outstanding Class B Shares

Questions Covered

Put yourself in Jimmy’s shoes and using information contained in exhibit 1. Explain the changes in the equity section of the balance sheet that occurred as a result of the five transactions which jimmy found referenced in Moog’s 2007 10-K filing. Discuss how they might affect the value of Jimmy’s restricted stock and options (in terms of the direction as opposed to magnitude of value changes) had he been working for the firm at the time. Where appropriate, provide details on any changes to the number of shares authorized, issues and outstanding as well as the appropriate valuation for balance sheet purposes.

Prepare the Shareholders Equity section of the Balance Sheet for Moog Inc. as at September 29, 2007.

Given your answer to the previous question and the additional information regarding transactions in 2008 detailed above, prepare and describe in detail the set of equity related transactions which would generate the Shareholder’s Equity section of the Balance Sheet for Moog Inc. as at September 28, 2008. Be specific in your responses and show all the effects of each transactions which result in a perfect replication of the 2008 Balance Sheet, you should document the effects of those transactions which you think occurred and provide the equity section of a pro-forma Balance Sheet for September)

For fiscal years beginning after December 15, 2005, the FASB requires that an expense (equal to the fair value of the option being granted) must be charged upon issuance of employee stock options. Assuming that Jimmy was issued a grant of 12,000 options which he will exercise once they are all vested when the stock price has risen to $10 per share, describe in detail how to account for the options in each fiscal year from the grant date until the exercise date. You should assume that the fair value of each option was $3 on the grant date when the stock price was $5.00 and that the first options would vest on the grant date. You should assume that the company issues new shares to satisfy its obligation.