preview

Proposal Analysis : ' Ruby Traditions Ltd '

Good Essays

Introduction:
Ruby Traditions Ltd had presented two proposals for fund proposed expansion, the first proposal is issue 200,000 preference share into the public. The second proposal is sale and leaseback of land and building. Since two proposal have their individual features, therefore the recorded journal entries for each proposal are also different during the period.

In the following paragraphs, two of the proposals are analysed individually and then conclude with the most suitable proposal to meet the current requisite of the company. In the first proposal analysis, the impacts should be highlighted and the preference share should be classified in accordance with AASB. In the second proposal analysis, relevant journal entries will be recorded in compliance with AASB standard, And detailed explanation on the classification of proposed leasing agreement

The impact of Proposal 1 as perceived by the directors:
Preference share refers to stock which are issued for ordinary share. One of key benefit of owning preference share is that shareholder receives the dividend prioritize than common shareholder. Moreover, if the company goes bankrupt, the preference shareholders are able to claim greater amount than common shareholder. However, one of major difference between preference share and common share is that preference shares do not obtain any voting rights.
Thus, the director does not need get any opinion from preference shareholder when arrives with policymaking decision.

Get Access