1. Examine the process of liquidating a public company
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1. Examine the process of liquidating a public company
2, Explain at least five (5) reasons why a
convertible preference shareholder will decide to convert the shares
into equity shares.
Step by step
Solved in 2 steps
- Which of the following statements is true? The outstanding number of shares is the maximum number of shares that can be issued by a corporation. The shares that are in the hands of the stockholders are said to be outstanding. It is very unlikely that corporations will have more than one class of stock outstanding. Preferred stock is stock that has been retired.Your friend is considering incorporating and asks for advice. Which of the following is not a major concern? A. colors for the logo B. which state in which to incorporate C. number of shares of stock to authorize D. selection of the corporation nameExplain at least five (5) reasons why aconvertible preference shareholder will decide to convert the sharesinto equity shares.
- Which of the following is a characteristic of common stock?a. The right to the residual income after creditors have been paidb. Limited liability in the case of the corporation going bankruptc. Voting rights to elect the board of directorsd. The right to maintain a proportionate share of ownership in the firm (when new shares are issued, stockholders have the first right of refusal)e. All of the aboveS1: Book value per share is the amount earned for every capital share owned by a shareholder. S2: When a shareholder exchanges convertible preference shares for ordinary shares, the difference between the par value of preference shares converted and the par value of the ordinary shares issued is recorded by the corporation as a gain or loss on conversion. a. False, True b. False, False c. True, True d. True, False1. The issuer of an ordinary share dividend to ordinary shareholders should transfer from retained earnings to contributed capital an amount equal to the a. fair value of the shares issued. b. par or stated value of the shares issued. c. book value of the shares issued. d. minimum legal requirements. 2. Statement 1: Treasury shares are a company’s own shares that have been reacquired and retired. Statement 2: The cost method records all transactions in treasury shares at their cost and reports the treasury shares as a deduction from ordinary shares. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect. 3. The declaration and issuance of a share dividend a. increases ordinary shares outstanding and increases total equity. b. increases retained earnings and increases total equity. c. decreases retained earnings but does not change total equity. d. may increase share premium but does not change total…
- 1. Using Problem 1 and assuming the preference shares are also participating, in case RED Corporation is liquidated, how much would be the total amount to be received by an investor who holds 2,400 ordinary shares and 500 preference shares? * 2. Using Problem 1, how much is the book value per ordinary share assuming the preference shares are non-cumulative and participating up to 12%? * 3. Using Problem 1 and assuming the preference shares are non-cumulative and participating up to 12%, in case RED Corporation is liquidated, how much would be the total amount to be received by an investor who holds 2,400 ordinary shares and 500 preference shares? * 4. How much would the total value of the three buildings be based on the above information? *In applying the Sec. 318 attribution rules to a stock redemption, the stock of a corporation is only deemed to be proportionately owned by the shareholder when the shareholder owns more than 50% of the corporate stock. This statement is True, correct?The directors of Merchant Corporation are considering the issuance of a stock dividend. They have asked you to discuss the proposed action by answering the following questions. Instructions a. What is a stock dividend? How is a stock dividend distinguished from a stock split (1) from a legal standpoint, and (2) from an accounting standpoint? b. For what reasons does a corporation usually declare a stock dividend? A stock split? c. Discuss the amount, if any, of retained earnings to be capitalized in connection with a stock dividend.
- 3a) Explain who is a member of a company and what are the rights and liabilities of members.(b) Discuss the differences between transfer of shares and transmission of shares. Minimum 1000word - no handwriting2. Which of the following statements is true? a.The shares that are in the hands of the shareholders are said to be outstanding. b.It is very unlikely that corporations will have more than one class of shares outstanding. c.Preferred shares are shares that have been retired. d.The outstanding number of shares is the maximum number of shares that can be issued by a corporation.Identify all of the following statements that are correct with regards to dividends and stock splits: a. The record date is the date that will determine who is eligible to receive a dividend. b. When a stock split occurs, a share’s market value will decline and, initially, each shareholder’s wealth will decline. c. Companies are not required to declare and issue dividends to common shareholders, but companies are required to declare and issue a dividend to preferred shareholders. d. If a person holds 25% of the common shares in a company, they will receive 25% of the total dividends paid on common shares. e. Both cash dividends and stock dividends decrease shareholders’ equity. f. The advantage of a stock split is that it may increase the marketability of the shares by lowering the share price. g. The Canada Business Corporations Act requires that stock dividends be recorded at book value. h. When a stock dividend is declared, additional shares will be issued to each shareholder based…