C a p i t a l R a i s i n g f o r C o r p o r a t i o n sD e s c r i b e t h e d i r e c t i o n a l e f f e c t ( i n c r e a s e , d e c r e a s e , o r n o e f f e c t ) o f e a c h t r a n s a c t i o n o n t h e c o m p o n e n t s o f t h e b o o k v a l u e o f c o m m o n s h a r e h o l d e r s ’ e q u i t y . E x p l a i n y o u r a n s w e r .I s s u a n c e o f $ 1 p a r v a l u e c o m m o n s t o c k a t a n a m o u n t g r e a t e r t h a n p a r v a l u eD o n a t i o n o f l a n d b y a g o v e r n m e n t a l u n i t t o a c o r p o r a t i o nC a s h d i v i d e n d d e c l a r e d 2 - f o r - 1 s t o c k s p l i t a n n o u n c e d a n d i s s u e S t o c k o p t i o n s g r a n t e d

a) Issuance of $1 par value common stock at an amount greater than par value: Increase in book value…

Answered: C a p i t a l R a i s i n g f o r…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA1: International Financial Reporting Standards

Section: Chapter Questions

Problem 3MCQ

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Question

C a p i t a l R a i s i n g f o r C o r p o r a t i o n s

D e s c r i b e t h e d i r e c t i o n a l e f f e c t ( i n c r e a s e , d e c r e a s e , o r n o e f f e c t ) o f e a c h t r a n s a c t i o n o n t h e c o m p o n e n t s o f t h e b o o k v a l u e o f c o m m o n s h a r e h o l d e r s ’ e q u i t y . E x p l a i n y o u r a n s w e r .

I s s u a n c e o f $ 1 p a r v a l u e c o m m o n s t o c k a t a n a m o u n t g r e a t e r t h a n p a r v a l u e
D o n a t i o n o f l a n d b y a g o v e r n m e n t a l u n i t t o a c o r p o r a t i o n
C a s h d i v i d e n d d e c l a r e d
2 - f o r - 1 s t o c k s p l i t a n n o u n c e d a n d i s s u e
S t o c k o p t i o n s g r a n t e d

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