Bond distributed 50,000 stock rights to Sassa. Sassa was entitled to buy one share of Bond Company for P90 cash and two of these rights. On August 30,2013, each share had a market value of P130 and each right had a market value of P20.

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A: Introduction: Preferred stock is similar to a regular stock in that it is a share in a corporation,…

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A:

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A: Step 1 A bond is a fixed income instrument that represents a loan made by an investor to a borrower.

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.