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A has 60 common shares subscribed for $600 of corporation. B has 40 common shares subscribed for $400 A also subscribes for 10 preferred shares by transferring land to the corporation worth $100. The land is now worth $1,000. What happens if the corporation distributes land to A as a return of capital on the common shares.

A has 60 common shares subscribed for $600 of corporation. B has 40 common shares subscribed for $400 A also subscribes for 10 preferred shares by transferring land to the corporation worth $100. The land is now worth $1,000. What happens if the corporation distributes land to A as a return of capital on the common shares.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A has 60 common shares subscribed for $600 of corporation. B has 40 common shares subscribed for $400 A also subscribes for 10 preferred shares by transferring land to the corporation worth $100. The land is now worth $1,000. What happens if the corporation distributes land to A as a return of capital on the common shares.
Transcribed Image Text:A has 60 common shares subscribed for $600 of corporation. B has 40 common shares subscribed for $400 A also subscribes for 10 preferred shares by transferring land to the corporation worth $100. The land is now worth $1,000. What happens if the corporation distributes land to A as a return of capital on the common shares.
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