61 Unlimited Cake Company (UCC), a family corporation in a gasoline business with no secondary license to trade stocks, is to purchase some idle land near its office with the purpose of extending its business operation. Instead of using cash to pay for the land, UCC issues 4,350 ordinary shares to Mr. Cake Lover, the seller and owner of the land. The ordinary shares have a par value of P1,500 per share and comparable to a currently valued active share listing of P6,750,870 in oil industry with a market price of P1,600 per share. The property has fair market value of P6,850,000. How much is the share premium, if any, upon purchase of the land by way of issuance of shares?
61 Unlimited Cake Company (UCC), a family corporation in a gasoline business with no secondary license to trade stocks, is to purchase some idle land near its office with the purpose of extending its business operation. Instead of using cash to pay for the land, UCC issues 4,350 ordinary shares to Mr. Cake Lover, the seller and owner of the land. The ordinary shares have a par value of P1,500 per share and comparable to a currently valued active share listing of P6,750,870 in oil industry with a market price of P1,600 per share. The property has fair market value of P6,850,000. How much is the share premium, if any, upon purchase of the land by way of issuance of shares?
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 8DQ
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Transcribed Image Text:61
Unlimited Cake Company (UCC), a family corporation in a gasoline business with no
secondary license to trade stocks, is to purchase some idle land near its office with the
purpose of extending its business operation. Instead of using cash to pay for the land, UCC
issues 4,350 ordinary shares to Mr. Cake Lover, the seller and owner of the land. The ordinary
shares have a par value of P1,500 per share and comparable to a currently valued active share
listing of P6,750,870 in oil industry with a market price of P1,600 per share. The property has
fair market value of P6,850,000. How much is the share premium, if any, upon purchase of the
land by way of issuance of shares?
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