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25. Vadel Inc., a Canadian public company, has 1,000,000 shares outstanding with a total PUC of $1,750,000. Mr. Vincent Dorval owns 5,000 of these shares with an adjusted cost base of $11,250. Vadel Inc. declares a 5 percent non-eligible stock dividend at a time when its shares are trading at $2.50 per share. Which of the following statements is correct? A. Mr. Dorval's Taxable Income will increase by $719 as a result of the dividend. B. After the dividend, the adjusted cost base of Mr. Dorval's shares will be $11,875. C. After the dividend, the PUC of Vadel's shares will be $1,875,000. D. All of the above. E. None of the above.

25. Vadel Inc., a Canadian public company, has 1,000,000 shares outstanding with a total PUC of $1,750,000. Mr. Vincent Dorval owns 5,000 of these shares with an adjusted cost base of $11,250. Vadel Inc. declares a 5 percent non-eligible stock dividend at a time when its shares are trading at $2.50 per share. Which of the following statements is correct? A. Mr. Dorval's Taxable Income will increase by $719 as a result of the dividend. B. After the dividend, the adjusted cost base of Mr. Dorval's shares will be $11,875. C. After the dividend, the PUC of Vadel's shares will be $1,875,000. D. All of the above. E. None of the above.

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter14: Corporation Accounting
Section: Chapter Questions
Problem 9PA: Aggregate Mining Corporation was incorporated five years ago. It is authorized to issue 500,000...
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25. Vadel Inc., a Canadian public company, has 1,000,000 shares outstanding with a total PUC of $1,750,000. Mr. Vincent Dorval owns 5,000 of these shares with an adjusted cost base of $11,250. Vadel Inc. declares a 5 percent non-eligible stock dividend at a time when its shares are trading at $2.50 per share. Which of the following statements is correct? A. Mr. Dorval's Taxable Income will increase by $719 as a result of the dividend. B. After the dividend, the adjusted cost base of Mr. Dorval's shares will be $11,875. C. After the dividend, the PUC of Vadel's shares will be $1,875,000. D. All of the above. E. None of the above.
Transcribed Image Text:25. Vadel Inc., a Canadian public company, has 1,000,000 shares outstanding with a total PUC of $1,750,000. Mr. Vincent Dorval owns 5,000 of these shares with an adjusted cost base of $11,250. Vadel Inc. declares a 5 percent non-eligible stock dividend at a time when its shares are trading at $2.50 per share. Which of the following statements is correct? A. Mr. Dorval's Taxable Income will increase by $719 as a result of the dividend. B. After the dividend, the adjusted cost base of Mr. Dorval's shares will be $11,875. C. After the dividend, the PUC of Vadel's shares will be $1,875,000. D. All of the above. E. None of the above.
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