1482 WordsMar 20, 20146 Pages
Case 13-3: Summary: This case is about a company named Hearts ‘R Us. This company provides research and development for medical devices. According to the information provided the company is in its early stage and has no products in the market. They have developed a Heart Valve System that would be revolutionary in the market if is approved. Also there’s another company called Bionic Body that is a biological medical device company, they have another product that would work well with this new Heart Valve System. Therefore both companies decided to fuse by agreement. The agreement is as follows: $3.5 million preferred stock shares of Series A from Heart Company are sold to Bionics with a par value of $1 each. This transaction was…show more content…
• Participation Rights: contractual rights of security holders to receive dividends or returns from the security issuer’s profits, cash flows, or returns on investment. FASB has some guide lines of how companies should report or disclose information of their securities. 1. FASB: addresses disclosure of information about capital arrangement is in the FASB Codification 505-10-50-3. 2. Participation Right is contractual right of security holders to receive dividends or returns from security issuer’s profits, cash flows or returns on investments. • FASB Codification 505-10-50-3: An entity shall explain, in summary form within its financial statements, the pertinent rights and privileges of the various securities outstanding. Examples of information that shall be disclosed are dividend and liquidation preferences, participation right, call prices and dates, conversion or exercise prices or rates and pertinent dates, sinking-fund requirements, unusual voting rights, and significant terms of contracts to issue additional shares. An entity shall disclose within its financial statements the number of shares issued upon conversion, exercise, or satisfaction of required conditions during at least the most recent
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