Chapter 13-1 Corporations Accounting Accounting Principles, Ninth Edition Corporations: Organization and Capital Stock Transactions: Acknowledgement: Most

Chapter 13-1

Corporations Accounting

Accounting Principles, Ninth Edition

Corporations: Organization and Capital Stock Transactions:

Acknowledgement: Most of the slides have been taken from Keise Accounting Principles, Ninth editionSome slides have been altered and some new slides inserted to meet the local regulatory environment in Pakistan

Chapter 13-2

1. Corporations: Introduction & Major Attributes

2. Shares Capital and Accounting for Shares Capital

3. Dividends & Retained Earnings

4. Quiz

Today we shall cover these concepts and basic accounting issues, which are scattered in Ch13 and Ch14. In next session, we shall discuss application of these concepts through a case study / short problems that shall be uploaded on group shortly, insha Allah

Study Objectives – Session 9Study Objectives – Session 9Study Objectives – Session 9Study Objectives – Session 9

Chapter 13-3

An entity separate and distinct from its owners.

The Corporate Form of OrganizationThe Corporate Form of OrganizationThe Corporate Form of OrganizationThe Corporate Form of Organization

Classified by Purpose

Not-for-Profit

For Profit

Classified by Ownership

Publicly held

Privately held

ICI Limited Ford Motor Company PepsiCo Google

Salvation Army American Cancer

Society Gates

Foundation

Amex

Chapter 13-4

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Government Regulations

Additional Taxes

Corporate Management

Characteristics that distinguish corporations from proprietorships and partnerships.

Characteristics of a CorporationCharacteristics of a CorporationCharacteristics of a CorporationCharacteristics of a Corporation

SO 1 Identify the major characteristics of a SO 1 Identify the major characteristics of a corporation.corporation.

Advantages

Disadvantages

Chapter 13-5





Continuous Life


Additional Taxes





Corporation acts under its own name rather than in the name of its stockholders.

Chapter 13-6





Continuous Life


Additional Taxes





Limited to their investment.

Chapter 13-7





Continuous Life


Additional Taxes





Shareholders may sell their stock.

Chapter 13-8





Continuous Life


Additional Taxes





Corporation can obtain capital through the issuance of stock.

Chapter 13-9





Continuous Life


Additional Taxes





Continuance as a going concern is not affected by the withdrawal, death, or incapacity of a stockholder, employee, or officer.

Chapter 13-10





Continuous Life


Additional Taxes





Chapter 13-11





Continuous Life


Additional Taxes





Corporations pay income taxes as a separate legal entity and in addition, stockholders pay taxes on cash dividends.

Chapter 13-12





Continuous Life


Additional Taxes





Separation of ownership and management prevents owners from having an active role in managing the company.

Chapter 13-13

File application with the Secretary of State.

Important Documentation

Memorandum of Association

Articles of Association

Prospectus

Certificate of Incorporation

Initial Steps:

Forming a CorporationForming a CorporationForming a CorporationForming a Corporation


Chapter 13-14

Required only when shares are to be issued in public and this is normally done after the formation of company- Initial Public Offer- Offer for Sale

It contains information likepast financial statements to datepurpose to which the fund shall be

usedforecasted financial statements etc.

Prospectus:

Forming a CorporationForming a CorporationForming a CorporationForming a Corporation


Chapter 13-15

1. Vote in election of board of directors and on actions that require stockholder approval.

Stockholders have the right to:

Ownership Rights of StockholdersOwnership Rights of StockholdersOwnership Rights of StockholdersOwnership Rights of Stockholders


2. Share the corporate earnings through receipt of dividends.

Illustration 13-3

Chapter 13-16

3. Keep the same percentage ownership when new shares of stock are issued (preemptive right*).




* A number of companies have eliminated the preemptive right.

Illustration 13-3

Chapter 13-17

4. Share in assets upon liquidation in proportion to their holdings. This is called a residual claim.




Illustration 13-3

Chapter 13-18

Stock Issue ConsiderationsStock Issue ConsiderationsStock Issue ConsiderationsStock Issue Considerations


MOA indicates the amount of stock that a corporation is authorized to sell.

Number of authorized shares is often reported in the stockholders’ equity section

Answer Why? Does this requires any entry?

Authorized Stock

Chapter 13-19



Factors in setting price for a new issue of stock:

1. the company’s anticipated future earnings

2. its expected dividend rate per share

3. its current financial position (assets and liabilities)

4. the current state of the economy

5. the current state of the securities market

Issuance of Stock

Chapter 13-20



Stock of publicly held companies is traded on organized exchanges.

Interaction between buyers and sellers determines the prices per share.

Prices set by the marketplace tend to follow the trend of a company’s earnings and dividends.

Factors beyond a company’s control, may cause day-to-day fluctuations in market prices.

Market Value of Stock

Chapter 13-21

Chapter 13-22



Par value determined the legal capital per share that a company must retain in the business. Easy to understand, it is the face value of a share. In Pakistan this is normally Rs.10

No-par value stock is quite common today in US, but not in Pakistan.

Par and No-Par Value Stock

Chapter 13-23

Paid-in CapitalPaid-in CapitalPaid-in CapitalPaid-in Capital

Retained Retained Earnings / Un-Earnings / Un-appropriated appropriated

ProfitProfit

Retained Retained Earnings / Un-Earnings / Un-appropriated appropriated

ProfitProfit

Paid-in Capital Paid-in Capital in Excess of Par in Excess of Par

/ Shares / Shares PremiumPremiumAccountAccount

Paid-in Capital Paid-in Capital in Excess of Par in Excess of Par

/ Shares / Shares PremiumPremiumAccountAccount

Two Primary Sources of

Equity

Common Stock / Common Stock / Ord. Shares Ord. Shares

CapitalCapital

Common Stock / Common Stock / Ord. Shares Ord. Shares

CapitalCapital

Preferred Stock / Preferred Stock / Preferred Shares Preferred Shares

CapitalCapital

Preferred Stock / Preferred Stock / Preferred Shares Preferred Shares

CapitalCapital

Corporate CapitalCorporate CapitalCorporate CapitalCorporate Capital

SO 2 Differentiate between paid-in capital and retained SO 2 Differentiate between paid-in capital and retained earnings.earnings.

Chapter 13-24

Corporate CapitalCorporate CapitalCorporate CapitalCorporate Capital

SO 2 Differentiate between paid-in capital and retained SO 2 Differentiate between paid-in capital and retained earnings.earnings.

Comparison of the owners’ equity (stockholders’ equity) accounts reported on a balance sheet for a proprietorship, a partnership, and a corporation.

Note that these two are not the only account in owners’ equity section of a company, but there are many more

Illustration 13-6

Chapter 13-25

IllustrationIllustration: : Assume that Hydro-Slide, Inc. issues 1,000 shares of $1 par value common stock at par for. Prepare the journal entry.

Cash 1,000

Common stock (1,000 x $1) / 1,000Ord. Shares Capital

SO 3 Record the issuance of common stock.SO 3 Record the issuance of common stock.

Accounting for Common Stock IssuesAccounting for Common Stock IssuesAccounting for Common Stock IssuesAccounting for Common Stock Issues

Issuing Par Value Common Stock for Cash

Chapter 13-26

IllustrationIllustration: : Assume that Hydro-Slide, Inc. issues 2,000 shares of $1 par value common stock. Prepare Hydro-Slide’s journal entry if (a) 1,000 share are issued for $1 per share, and (b) 1,000 shares are issued for $5 per share.Cash 1,000

Common stock / (1,000 x $1)

1,000 Ord. Shares Capital

Cash 5,000

Common stock (1,000 x $1)

1,000 Ord. Shares CapitalPaid-in capital in excess of par value /

4,000Ordinary Shares Premium

a.

b.



Issuing Par Value Common Stock for Cash

Chapter 13-27

Jan 15Jan 15thth - Shifa Hospital Invited applications for issue of - Shifa Hospital Invited applications for issue of its 10,000 shares of par Rs.10 each at Rs.12.its 10,000 shares of par Rs.10 each at Rs.12.

No EntryNo Entry

Jan 20Jan 20thth – Received share applications for 15,000 shares – Received share applications for 15,000 shares with bank deposits of application moneywith bank deposits of application money

BankBank 180,000180,000

Share ApplicationsShare Applications 180,000180,000



Infact, actually issue of shares involves a processWhereby more accounts are involved

Chapter 13-28

Feb 8Feb 8thth – Decided over successful candidates through – Decided over successful candidates through ballotingballoting


Shares CapitalShares Capital 100,000100,000Shares PremiumShares Premium 20,000 20,000

Feb 11Feb 11thth – Refunded money to unsuccessful candidates – Refunded money to unsuccessful candidates


BankBank 60,00060,000



Infact, actually issue of shares involves a processWhereby more accounts are involved

Chapter 13-29

The fixation of issue price pose a risk of over or under The fixation of issue price pose a risk of over or under subscriptionsubscription

If oversubscribed, means issue price could have been set If oversubscribed, means issue price could have been set on higher side.on higher side.

If undersubscribed, means price market percetion of If undersubscribed, means price market percetion of issue price is too high.issue price is too high.

Underwritting do not serve to mitigate this risk hundred Underwritting do not serve to mitigate this risk hundred percentpercent



Book Building Process

Chapter 13-30

The Book Building Process is a recent development The Book Building Process is a recent development subscribed in Pakistan too since last couple of yearssubscribed in Pakistan too since last couple of years

The issue is divided into first and second issue

First issue is at open bid for major buyers only with minimum price limit

Once price is fixed in first issue, the second issue is floated at this price



Book Building Process

Chapter 13-31



Illustration 13-7

Chapter 13-32

Issuing Common Stock for Services orNoncash Assets

Corporations also may issue stock for:

Services (attorneys or consultants).

Noncash assets (land, buildings, and equipment).



Cost is either the fair market value of the consideration given up, or the fair market value of the consideration received, whichever is more clearly determinable.

Chapter 13-33

Illustration: Assume that attorneys have helped Jordan Company incorporate. They have billed the company $5,000 for their services. They agree to accept 4,000 shares of $1 par value common stock in payment of their bill. At the time of the exchange, there is no established market price for the stock. Prepare the journal entry for this transaction.

Organizational expense 5,000


4,000Paid-in capital in excess of par

1,000



Chapter 13-34

Illustration: Assume that Athletic Research Inc. is an existing publicly held corporation. Its $5 par value stock is actively traded at $8 per share. The company issues 10,000 shares of stock to acquire land recently advertised for sale at $90,000. Prepare the journal entry for this transaction.

Land (10,000 x $8) 80,000


50,000Paid-in capital in excess of par

30,000



Chapter 13-35

Paid-in CapitalPaid-in CapitalPaid-in CapitalPaid-in Capital

Retained Retained EarningsEarningsAccountAccount

Retained Retained EarningsEarningsAccountAccount

Paid-in Capital Paid-in Capital in Excess of Parin Excess of Par

AccountAccount

Paid-in Capital Paid-in Capital in Excess of Parin Excess of Par

AccountAccount

Less:Less:Treasury StockTreasury Stock

Account

Less:Less:Treasury StockTreasury Stock

Account

Two Primary Sources of

Equity

Common StockCommon StockAccountAccount

Common StockCommon StockAccountAccount

Preferred StockPreferred StockAccountAccount

Preferred StockPreferred StockAccountAccount

Accounting for Treasury StockAccounting for Treasury StockAccounting for Treasury StockAccounting for Treasury Stock

SO 4 Explain the accounting for treasury stock.SO 4 Explain the accounting for treasury stock.

Chapter 13-36

Treasury stock - corporation’s own stock that it has reacquired from shareholders, but not retired.Corporations purchase their outstanding stock:

1. To reissue the shares to officers and employees under bonus and stock compensation plans.

2. To enhance the stock’s market value.

3. To have additional shares available for use in the acquisition of other companies.

4. To increase earnings per share.

5. To rid the company of disgruntled investors, perhaps to avoid a takeover.



Chapter 13-37

Not allowed in Pakistan , now again



Chapter 13-38

Features often associated with preferred stock.

1. Preference as to dividends.

2. Preference as to assets in liquidation.

3. Nonvoting.

4. Normally fixed dividends (like interest)

5. Normally cumulative

6. May be participative

7. May be redeemable

8. May be convertible

SO 5 Differentiate preferred stock from common stock.

Preferred StockPreferred StockPreferred StockPreferred Stock

Accounting for preferred stock at issuance is similar to that for common stock.

Chapter 13-39

Illustration: Stine Corporation issues 10,000 shares of$10 par value preferred stock for $12 cash per share. Journalize the issuance of the preferred stock.



Cash 120,000

Preferred stock (10,000 x $10)

100,000Paid-in capital in excess of par – Preferred stock

20,000Preferred stock may have a par value or no-par value.

Chapter 13-40

Dividend Preferences

Right to receive dividends before common stockholders.

Per share dividend amount is stated as a percentage of the preferred stock’s par value or as a specified amount.

Cumulative dividend – holders of preferred stock must be paid their annual dividend plus any dividends in arrears before common stockholders receive dividends.



Chapter 13-41 SO 6 Prepare a stockholders’ equity section.

Statement PresentationStatement PresentationStatement PresentationStatement Presentation

Illustration 13-12

Chapter 13-42

Book Value per share (Break-up value)

It is the net value per share from the balance sheet on a certain date. More precisely, it is the amount represented by on share in the net assets of the company

BV = T o t a l SHE – P r e f. S t o c k no. of outstanding common shares

Although the preferred stock itself is deducted in numerator, shares premium on preferred shares is normally not deducted


Statement AnalysisStatement AnalysisStatement AnalysisStatement Analysis

Chapter 13-43

What information Book Value conveys?

Tips:

See from liquidation perspective

See from market value perspective


Statement AnalysisStatement AnalysisStatement AnalysisStatement Analysis

Chapter 13-44

Chapter 13 Ended

CopyrightCopyrightCopyrightCopyright

Chapter 13-45

Chapter 14

Accounting Principles, Ninth Edition

Corporations: Dividends, Retained

Earnings, and Income Reporting

Chapter 13-46

A distribution of cash or stock to stockholders on a pro rata (proportional) basis.

Types of Dividends:

DividendsDividendsDividendsDividends

SO 1 Prepare the entries for cash dividends and stock SO 1 Prepare the entries for cash dividends and stock dividends.dividends.

1. Cash dividends.

2. Property dividends .

Dividends expressed: (1) as a percentage of the par or stated value, or (2) as a dollar amount per share.

3. Stock dividends.

Chapter 13-47

Par Value Rs.10Number of shares issued 100,000Net Income for the year Rs.60,000Dividend amount total Rs.40,000Dividend Rate (%): ?Per share dividend: ?



Chapter 13-48

Par Value Rs.10Number of shares issued 100,000Net Income for the year Rs.60,000 Dividend amount total: ?Dividend Rate (%): 20%Per share dividend: ?



Chapter 13-49

Par Value Rs.10Number of shares issued 100,000Net Income for the year Rs.60,000 Dividend amount total: ?Dividend Rate (%): ?Per share dividend: Rs.4.5



Chapter 13-50

What kind of property dividends a company pay?



1. Cash dividends.

2. Property dividends .

3. Stock dividends.

Chapter 13-51

The following dates and events are important in respect of dividend

Dividends – Important Dates 1Dividends – Important Dates 1Dividends – Important Dates 1Dividends – Important Dates 1


• Period Closure DateThe date for which financial statements are prepared (not published, because actual preparation and publishing takes place much after the effective date)

Entry?

Chapter 13-52

The following dates and events are important



• Dividends Declaration (Results Announcement) DateOr BOD Meeting Date:On this date companies announce their results via fax or email to stock exchange in brief after the same being recommended in BOD meetingEntry?

Chapter 13-53




• Book Closure Date The date on which share transfer books are closed. This is normally a seven to ten days period

Entry?• Q: Why this date? (white text)

To determine dividend’s entitlement. The shareholder registered up to this date will get the dividends

Chapter 13-54




• Annual General Meeting / Approval Date

Date on which shareholders meet to approve dividends

Entry?Yes

Chapter 13-55

Cash Dividends

For a corporation to pay a cash dividend, it must have:

1. Retained earnings - Payment of cash dividends from retained earnings is legal in all states.

2. Adequate cash.

3. A declaration and approval of dividends by the Board of Directors and approval by shareholders in AGM.



Chapter 13-56

Illustration: On Dec. 1, the directors of Media General declare a 50¢ per share cash dividend on 100,000 shares of Rs.10 par value common stock. On December 22nd, the shareholders approved the dividend in AGM. The dividend is payable on Jan. 20 to shareholders of record on Dec. 21st?

Retained earnings 50,000Dividends payable 50,000

December 21st (Date of Record / Book closure date)January 20 (Payment Date)



Dividends payable 50,000Cash 50,000

No entry

Chapter 13-57

Allocating Cash Dividends Between Preferred and Common Stock



Holders of cumulative preferred stock must be paid any unpaid prior-year dividends before common stockholders receive dividends.

Chapter 13-58



Illustration: On December 31, 2010, IBR Inc. has 1,000 shares of 8%, Rs.100 par value cumulative preferred stock. It also has 50,000 shares of Rs.10 par value common stock outstanding. At December 31, 2010, the directors declare a Rs.6,000 cash dividend. Prepare the entry to record the declaration of the dividend.

Retained earnings 6,000

Dividends payable

6,000Pfd Dividends: 1,000 shares x Rs.100 par x 8% = Rs.8,000

Umpaid = Rs.2000

Chapter 13-59



2010 2011

Dividends declared 6,000$

Dividends in arrears

Allocation to pref erred 6,000

Remainder to common -$

* 1,000 shares x Rs.100 par x 8% = Rs.8,000

*

** 2010 Pfd. dividends Rs.8,000 – declared Rs.6,000 = Rs.2,000

**

Illustration: At December 31, 2011, IBR declares a Rs.50,000 cash dividend. Show the allocation of dividends to each class of stock.

50,0002,000

8,000

40,000

Chapter 13-60

Stock Dividends

Pro rata distribution of the corporation’s own stock.



Results in decrease in retained earnings and increase in paid-in capital.

Illustration 14-3

Chapter 13-61

Stock Dividends

Reasons why corporations issue stock dividends:

1. To satisfy stockholders’ dividend expectations without spending cash.

2. To increase the marketability of the corporation’s stock.

3. To emphasize that a portion of stockholders’ equity has been permanently reinvested in the business.



Chapter 13-62

Size of Stock Dividends

Small stock dividend (less than 20–25% of the corporation’s issued stock, recorded at fair market value)

Large stock dividend (greater than 20–25% of issued stock, recorded at par value)

Both are same from our regulatory environment perspective. Both are recorded at Par



*

Chapter 13-63

10% stock dividend is declaredRetained earnings (5,000 x 10% x Rs.10) 5000

Common stock dividends distributable 5000

Stock issued

Common stock div. distributable 5000Common stock (5,000 x 10% x Rs.10) 5000

Illustration: HH Inc. has 5,000 shares issued and outstanding. The per share par value is Rs.10, book value Rs.32 and market value is Rs.40.



Chapter 13-64

S tockholders' equityP aid-in capita l

C ommon stock, $1 par, 5 ,000 issuedand outstanding 5,000$

C om m on stock d ividends d istributab le 500 P aid-in capita l in excess of par 64,500

Reta ined earnings 90,000 Total stockholders' equity 160,000$

H H Inc.B alance S heet (partia l)

Stockholders’ Equity with Dividends Distributable



Chapter 13-65

HH Inc. Before After NetDividend Dividend Change

Stockholders' equityPaid-in capital

Common stock, $1 par, 5,000 issuedand outstanding 5,000$ 5,500$ 500$

Paid-in capital in excess of par 45,000 64,500 19,500 Retained earnings 110,000 90,000 (20,000)

Total stockholders' equity 160,000$ 160,000$

Outstanding shares 5,000 5,500 Book value per share 32$ 29$



Effects of Stock Dividends

Chapter 13-66

In the stockholders’ equity section, Common Stock Dividends Distributable is reported as a(n):

a. deduction from total paid-in capital and retained earnings.

b. current liability.

c. deduction from retained earnings.

d. addition to capital stock.

QuestionQuestion



Chapter 13-67

Stock Split

Reduces the market value of shares.

No entry recorded for a stock split.

Decrease par value and increase number of shares.



Chapter 13-68

2 for 1 Stock Split

No Entry -- Disclosure that par is now Rs.0.50 No Entry -- Disclosure that par is now Rs.0.50 and shares outstanding are 10,000.and shares outstanding are 10,000.

Illustration: HH Inc. has 5,000 shares issued and outstanding. The per share par value is Rs.1, book value Rs.32 and market value is Rs.40.



Chapter 13-69

Chapter 13-70

HH Inc. Before After NetSplit Split Change

Stockholders' equityPaid-in capital

Common stock 5,000$ 5,000$ -$ Paid-in capital in excess of par 45,000 45,000 -

Retained earnings 110,000 110,000 - Total stockholders' equity 160,000$ 160,000$ -$

Outstanding shares 5,000 10,000

Book value per share 32$ 16$



Effects of Stock Splits

Chapter 13-71

Retained earnings is net income that a company retains for use in the business.

Net income increases Retained Earnings and a net loss decreases Retained Earnings.

Retained earnings is part of the stockholders’ claim on the total assets of the corporation.

A debit balance in Retained Earnings is identified as a deficit.

Retained EarningsRetained EarningsRetained EarningsRetained Earnings

SO 2 Identify the items reported in a retained earnings SO 2 Identify the items reported in a retained earnings statement.statement.

Chapter 13-72

Restrictions can result from:

1. Legal restrictions.

2. Contractual restrictions.

3. Voluntary restrictions.

Retained Earnings RestrictionsRetained Earnings RestrictionsRetained Earnings RestrictionsRetained Earnings Restrictions


Companies generally disclose retained earnings restrictions in the notes to the financial statements.

Chapter 13-73

Corrections of Errors

Result from: mathematical mistakes mistakes in application of accounting

principles oversight or misuse of facts

Corrections treated as prior period adjustments

Adjustment made to the beginning balance of retained earnings (commonly known as restatement of retained earnings)

Prior Period AdjustmentsPrior Period AdjustmentsPrior Period AdjustmentsPrior Period Adjustments


Chapter 13-74

Woods, Inc.Statement of Retained Earnings

For the Year Ended December 31, 2010

Balance, January 1 1,050,000$ Net income 360,000 Dividends (300,000) Balance, December 31 1,110,000$

Before issuing the report for the year ended December 31, 2010, you discover a Rs.50,000 error (net of tax) that caused the 2009 inventory to be overstated (overstated inventory caused COGS to be lower and thus net income to be higher in 2009. Would this discovery have any impact on the reporting of the Statement of Retained Earnings for 2010?

Prior Period AdjustmentsPrior Period AdjustmentsPrior Period AdjustmentsPrior Period Adjustments


Chapter 13-75

Woods, Inc.Statement of Retained Earnings

For the Year Ended December 31, 2010

Balance, January 1, as previously reported 1,050,000$ Prior period adjustment - error correction (50,000) Balance, January 1, as restated 1,000,000 Net income 360,000 Dividends (300,000) Balance, December 31 1,060,000$

Retained Earnings StatementRetained Earnings StatementRetained Earnings StatementRetained Earnings Statement


Chapter 13-76

Retained Earnings StatementRetained Earnings StatementRetained Earnings StatementRetained Earnings Statement


The company prepares the statement from the Retained Earnings account.

Illustration 14-13

Chapter 13-77 SO 3 Prepare and analyze a comprehensive stockholders’ equity

section.

Statement Analysis and PresentationStatement Analysis and PresentationStatement Analysis and PresentationStatement Analysis and Presentation

Illustration 14-15

Chapter 13-78

Stockholders’ Equity Analysis

Net Income Available to Common Stockholders

Return on Common

Stockholders’ Equity

= Average Common

Stockholders’ Equity

SO 3 Prepare and analyze a comprehensive stockholders’ equity section.


This ratio shows how many dollars of net income the company earned for each dollar invested by the stockholders.

Chapter 13-79

Income Statement Presentation

SO 4 Describe the form and content of corporation income statements.


Illustration 14-17

Chapter 13-80

Income Statement Analysis

Net Income minus Preferred DividendsEarnings

Per Share

= Weighted-Average Common Shares Outstanding

SO 5 Compute Earnings Per Share.


This ratio indicates the net income earned by each share of outstanding common stock.

Chapter 13-81

The income statement for Nadeen, Inc. shows income before income taxes Rs.700,000, income tax expense Rs.210,000, and net income Rs.490,000. If Nadeen has 100,000 shares of common stock outstanding throughout the year, earnings per share is:

a. Rs.7.00.

b. Rs.4.90.

c. Rs.2.10.

d. No correct answer is given.

QuestionQuestion

(Rs.490,000 / 100,000 = Rs.4.90)



Chapter 13-82

Assume Searle finds growth opportunities within same business and need needs a Rs.1.00 billion extra finance.

Suggest a likely price at which Searle should issue its new shares capital. Support your answer with brief valid arguments. Also identify the maximum limit of news shares Searle can issue without amending its MOA.


Chapter 13-83

“Copyright © 2009 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.”

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Chapter 13-1 Corporations Accounting Accounting Principles, Ninth Edition Corporations: Organization and Capital Stock Transactions: Acknowledgement: Most