A corporation issues its preferred stock in exchange for land and a building with a combined market value of $200,000. This transaction increases the corporation's owners' equity by $200,000 regardless of the assets' prior book values. Is this statement true or false? Explain.
Q: Use the following information for the next two (2) questions: Cavalier Company was incorporation on…
A: Retained earnings seem to be the profits that remain with the firm just after the payment of…
Q: Company acquired land and building by issuing 60,000, P10 ordinary shares. On the date of…
A: Net income increases a company's stockholders' equity, which is the value of its assets less its…
Q: The company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: Introduction: Journal: Recording of a business transactions in a chronological order. First step in…
Q: ymex Corporation is engaged in the business of manufacturing and selling pens and pencils on…
A: Step 1 Acquisition accounting is a collection of structured rules that describe how a buyer would…
Q: BC paid finder's fees of P80,000, legal fees of P26,000, audit fees related to stock issuance of…
A: solution concept as per the provision of IFRS 3 The direct and indirect cost related to business…
Q: Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for…
A: Fixed Assets: It refers to the long-term assets having a useful life of more than a year which is,…
Q: Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the…
A: ANSWER General Rule under sec 351(a) : No gain or lossshall be recognized if the property is…
Q: A corporation purchased 1,000 shares of its own $5 par common stock at $10 and subsequently sold 500…
A: Revenue is the total amount realized from selling the said number of shares. Shares are the…
Q: 6. The owners are desirous of comparing serval financial transactions and possible outcomes to…
A: The par value of the stock if not given, will be assumed as 100. The dividend is always paid…
Q: The company's charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: Journal- The first stage of the accounting process is journalizing. Journal is the primary book of…
Q: What effect will the above transaction have on the investing activities section of Sulu's statement…
A: The correct answer is b. $80,000 increase.
Q: Gearty and Olinto organized The Worthington Corp., which issued voting common stock with a fair…
A: Requirement: In the given question it is given that Greaty and Olinto organized a Worthington Corp.…
Q: X, resident citizen, had the following information for the year 2022: Gain from sale of office…
A: According to the given question, we are required to compute the total capital gains tax. Capital…
Q: Determine the basis of the property contributed in the hands of the corporation in each instance.…
A: working note: (b) Hence there is a gain of $540 since it is lesser than the FMV of the property that…
Q: The company's charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: Journal entries:
Q: The company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…
Q: This comment appeared in the annual report of Mac-Cloud Inc.: “The Company could pay cash or…
A: Definition:
Q: Kansas Company acquired a building valued at $210,000 for property tax purposes in exchange for…
A: Par value is the value that is associated and listed with the Security of Exchanges Board, however,…
Q: Erica Company had the following property acquisitions during the current year: 1. Acquired a tract…
A: Since yo have posted the question with multiple subpart, we will solve the first three subpart for…
Q: The Business charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…
Q: The company's chater authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: Introduction: Journal: Recording of a business transactions in a chronological order. First step in…
Q: Kansas Company acquired a building valued at $170,000 for property tax purposes in exchange for…
A: Fair value: It is the price that the buyer is willing to pay for the asset.
Q: Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the…
A: General Rule under sec 351(a) : No gain or lossshall be recognized if the property is transferred to…
Q: The company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: Introduction: Journal: Recording of a business transactions in a chronological order. First step in…
Q: Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the…
A: Here recognized gain or loss is nil
Q: This comment appeared in the annual report of MacCloud Inc.: “The Company could pay cash or property…
A:
Q: Ramon incorporated his sole proprietorship by transferring inventory, a building, and land to the…
A: Gain realized = Fair market value- adjusted tax basis of property transferred = 282250 - 136750…
Q: The company's chater authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: A & B :
Q: Ramon incorporated his sole proprietorship by transferring inventory, a building, and land to the…
A: Adjusted tax basis is cost of asset after adjusting various tax related items.
Q: der in each of the follow independent cases. In all cases, assume that the 80% test is met. a.…
A: The basis of a stock is the purchase price less commissions and other costs. When a security is…
Q: r's stock. The land has a fair market value (FMV) of $40,000 and an adjusted basis of $23,000. The…
A: Given: Fair market value (FMV)=$40,000 Adjusted basis =$23,000 The corporation's stock = $30,000
Q: uestion: What is the 2019 net investment income?
A: Calculation of Fair Value of investment as on 31 Dec 2019 Particulars Amount Carrying…
Q: Hong Banjang was incorporated on January 1, 2020. The following were the transactions during the…
A: Particulars Amount Mortgage on the land and building ₱20,000 Net payment made on the…
Q: Steak Company acquired a building valued at $176,400 for property tax purposes in exchange for…
A: A building is a long-term investment. When you buy something, you're concerned about the amount of…
Q: All of the stock of KB Corporation is owned by B, an individual. During the current year KB…
A: Here appreciated property is distributed to the single shareholder B by the KB Corporation. During…
Q: A corporation has an estimated liquidation value (after all prior claims have been satisfied) of…
A: Answer - A total of 30,00000 can be distributed amoung them. ( Fixed Assets - 15,00,000 + Current…
Q: Corporation ("C") had accumulated E&P of $30,000 at the beginning of the current year. During the…
A: The given statement is False....As a result, A will recognize $20,000(Fair value--Liability)as…
Q: A closely held corporation sought to repurchase 25 percent of its outstanding shares from one of its…
A: Shares refers to the unit used as mutual funds, limited partnerships, and real estate investment…
Q: JJJ Co. was incorporated on January 1, 20x1. The following were the transactions during the year:…
A: ANSWER JJJ Co was incorporation on January 1, 20x1. The following were the transactions during the…
Q: sume the following independent cases: A. At the beginning of the year, a check was issued for…
A: Answer AMOUNT CASE A The cost of Land will be Cheque issued…
Q: he company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: Owner's Equity common and preference shares issued and the reserve and surplus of the company. In…
Q: Kelly's Corp. authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and…
A: Introduction: Journal: Recording of business transactions in a chronological order. First step in…
Q: BTS Co. was incorporated on January 1, 2021. The following were the transactions during the year: •…
A: Particulars Amount Mortgage on the land and building ₱200,000 Net payment made on the…
Q: The Business charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred…
A: Stocks: Stocks are shares in ownership of the companies. It represents the capital raised by a…
Q: A, B, C, D and E is organizing a corporation whose Authorized Capital Stock is 64,000 with par value…
A: Capital requirements for local and foreign entities which want to set up their business in…
Q: ABC paid finder's fees of P80,000, legal fees of P26,000, audit fees related to stock issuance of…
A: In certain cases a well performing company may desire to acquire another company by purchasing…
Q: A, an individual (“A”) and X Corporation (“X”) each transferred property with a fair market value…
A: The following transactions are evaluated the transactions as per the given information.
A corporation issues its preferred stock in exchange for land and a building with a combined market value of $200,000. This transaction increases the corporation's owners' equity by $200,000 regardless of the assets' prior book values. Is this statement true or false? Explain.
Step by step
Solved in 2 steps
- Please answer the multiple choice questions with only simple explanation. Thankyou! 6.) Assets or services acquired by a corporation in exchange for shares of stock should be recorded at: the book value of the stock at the time of the transaction the difference between the historical cost of the assets or services received and the amount of cash paid out as a result of the transaction the historical cost of the assets or services received less any cash received as a result of the transaction the fair market value of the assets or services received 7.) Which of the following regarding the conversion of preferred stock into common stock is true? gains resulting from a conversion are recognized and losses resulting from a conversion are not recognized losses resulting from a conversion are recognized and gains resulting from a conversion are not recognized both gains and losses from a conversion are not recognized…Which of the following scenarios does a donated capital arise? * Forgiveness of an existing loan from the government An equipment from a manufacturer Shares donated by a shareholder to the corporation Financial aid from the government Which of the following is true about share split? * It increases the total number of outstanding shares It increases the aggregate par value of shares It decreases the retained earnings of the corporation All of the above.The total amount of cash and other assets received by a corporation from the stockholders in exchange for the shares is ________. A. always equal to par value B. referred to as retained earnings C. always below its stated value D. referred to as paid-in capital
- The Vary Company has total assets with a book value of $3,000,000 and a fair value of $4,000,000. A potential primary beneficiary company has guaranteed the debt of the Vary Company and will receive a share of income of the Vary Company based on contractual terms. The primary beneficiary will also have decision power. a. Will the primary beneficiary company record an investment in the equity of the Vary Company? b. Will the Vary Company need to be consolidated. If it is to be consolidated, what adjustments would be needed in the consolidation process?A newly formed corporation received the following assets in exchange for stock: Appreciation Basis FMV (Built in Loss) Adjusted Basis Equipment 300,000 250,000 Land 400,000 430,000 Trucks/Other 400,000 320,000 Building 400,000 220,000 What is the corporation’s adjusted basis of each asset to the corporation? You must show your calculations.Which statement is incorrect? a. Book value per share is the claim of a shareholder in the net assets of the corporation for every share held in the corporation. b. If a corporation has 2 classes of shareholders, the book value per share should be computed for both preference shares and ordinary shares. c. Book value per share assumes that assets are realized at book values and liabilities are liquidated at book values. Total gains (losses) on realization of assets and liquidation of liabilities, if there are any, are assumed to sum up to zero. d. Excess over par refers to the amount of shareholders’ equity in excess of the total par value of the preference shares and ordinary shares issued by the corporation. e. none of the above
- A shareholder contributes land and a building with fair market values of $ 308 and $837 respectively in return for common stock and $ 11 in cash. How much boot, if any, is allocated to the land?Which statement is incorrect? * Book value per share is the claim of a shareholder in the net assets of the corporation for every share held in the corporation. If a corporation has 2 classes of shareholders, the book value per share should be computed for both preference shares and ordinary shares. Book value per share assumes that assets are realized at book values and liabilities are liquidated at book values. Total gains (losses) on realization of assets and liquidation of liabilities, if there are any, are assumed to sum up to zero. Excess over par refers to the amount of shareholders’ equity in excess of the total par value of the preference shares and ordinary shares issued by the corporation. none of the aboveA tract of land valued at $50,000 has been given to a corporation in exchange for 1,000 preferred shares. Required: a. Prepare the journal entry to record the transaction. b. Where would the transaction be classified in the balance sheet?
- Indigo Corporation wants to transfer cash of $150,000 or property worth $150,000 to one of its shareholders, Linda, in a redemption transaction that will be treated as a qualifying stock redemption. If Indigo distributes property, the corporation will choose between two assets that are each worth $150,000 and are no longer needed in its business: Property A (basis of $75,000) and Property B (basis of $195,000). a. Compute Indigo’s recognized gain or loss if it distributes Property A in redemption of Linda’s shares. b. Compute Indigo’s recognized gain or loss if it distributes Property B in redemption of Linda’s shares. c. Compute Indigo’s recognized gain or loss if it sells Property B to an unrelated party and then distributes the sale proceeds in redemption of Linda’s shares.If the corporation when formed sets a par value for its shares low and issue common stock for a price above par, what is this amount above par called? Can this amount be treated as a gain, income, or profit for the corporation? Please give the reason for your answer. Can I have this explained because I am thinking this will be classed as capital to the business and if so which one would this be treated as above Gain, Income, or Profit?This comment appeared in the annual report of Mac-Cloud Inc.: “The Company could pay cash or propertydividends on the Class A common stock without payingcash or property dividends on the Class B common stock.But if the Company pays any cash or property dividendson the Class B common stock, it would be required to payat least the same dividend on the Class A common stock.”How is a property dividend accounted for in the financialrecords?
