Charlie owns all the issued shares of X Ltd. These common shares have an ACBand PUC of $60,000 and are worth $740,000. Charlie would like to freeze hisinterest in the company at today's value so that future increases in value accrue tothree employees. In the course of a reorganization of share capital, Charlieexchanged his common shares for preferred shares of X plus debt of $25,000.The preferred shares are redeemable for $715,000. The employees then acquirednewly issued common shares of X for $70,000. What is the PUC of the preferredshares owned by Charlie?$ 60000

On the event of reorganization of share capital with continued interest of all parties, shareholders…

Answered: Charlie owns all the issued shares of X…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Eight years ago, SW purchased 1,750 shares of Delta stock. On May 20 of the current year, it sold these shares for $50 per share. Required: In each of the following cases, compute SW's recognized gain or loss on this sale: a. SW's cost basis in the 1,750 shares was $62 per share. It did not purchase any other Delta shares during this year. b. SW's cost basis in the 1,750 shares was $62 per share. It purchased 1,950 shares of Delta on May 1 for $52 per share. c. SW's cost basis in the 1,750 shares was $62 per share. It purchased 1,950 shares of Delta on June 8 for $52 per share. d. SW's cost basis in the 1,750 shares was $41 per share. It purchased 1,950 shares of Delta on June 8 for $52 per share. a. b. C. d. Amount
Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2017, Hamilton sold $2,000,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 40 percent of these bonds at 92 percent of face value on January 1, 2019. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) December 31, 2019 December 31, 2020 December 31, 2021
Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.On January 1, 2014, Hamilton sold $1,000,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2016. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates.a. December 31, 2016b. December 31, 2017c. December 31, 2018
Shetland Corporation, a C corporation, has E&P of $1,000,000. The corporation stock is held as follows: Matthew 1,000 shares Aaron 1,000 shares Fay 1,000 shares Marlyebone Partnership 1,000 shares Devon Corp. 1,000 shares Total Shares 5,000 shares Matthew would like to redeem 500 shares of stock. The fair market value of the stock is $200,000. Matthew acquired the stock 10 years ago and has a basis of $200/share in her stock. Note: Since Shetland Corporation is not traded on an exchange, Matthew does not have the option for selling his stock on an open market. Here is additional information about Shetland Corporation: · Aaron is Matthew’s first cousin · Fay is Matthew’s mother · Matthew owns 10% of Marlyebone Partnership · Matthew owns 20% of the shares in Devon Corporation a. Will this redemption of 500 shares of Matthew’s stock be treated as a qualified stock redemption or will it be treated as a distribution? Support your answer with calculations. b. How much tax must…
Rare Corporation has accumulated E&P of $2,000,000. The corporation has 1,000 shares of common stock outstanding and owned by unrelated parties as follows: Julie, 500 shares and Jim, 500 shares. Julie and Jim each paid $200 per share for Rare stock 15 years ago. At the end of the year, Rare distributes securities (fair market value $250,000 and adjusted basis of $140,000) to Julie in redemption of 200 share of her stock. Will Julie’s redemption of stock receive sale and exchange treatment or will it be treated as a distribution of property? Your answer should include numerical calculations.
Sagar
The stock in Toucan Corporation is held equally by two brothers. Four years ago, the shareholders transferred property (basis of $200,000, fair market value of $220,000) to Toucan Corporation as a contribution to capital. In the current year and pursuant to a complete liquidation of Toucan, the property is distributed proportionately to the brothers. At the time of the distribution, the property had a fair market value of $40,000. What amount of loss will Toucan Corporation recognize on the distribution of the property? Oa. $160,000 Ob. $0 Oc. $20,000 Od. $180,000
Nail Corporation made a distribution of $589, 110 to Rusty in partial liquidation of the company on December 31 of this year. Rusty, an individual, owns 100 percent of Nail Corporation. The distribution was in exchange for 50 percent of Rusty's stock in the company. At the time of the distribution, the shares had a fair market value of $219 per share. Rusty's tax basis in the shares was $ 50 per share. Nail had total E&P of $8,485,000 at the time of the distribution. a. What are the amount and character (capital gain or dividend) of any income or gain recognized by Rusty because of the partial liquidation? Capital gain/ Dividend . . . . . . . ./ per share b. Assuming Nail made no other distributions to Rusty during the year, by what amount does Nail reduce its total E&P because of the partial liquidation?
Cairns owns 75 percent of the voting stock of Hamilton, Incorporated. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2020, Hamilton sold $2,000,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 40 percent of these bonds at 92 percent of face value on January 1, 2022. Both companies utilize the straight-line method of amortization. Required: Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. December 31, 2022 December 31, 2023 December 31, 2024
Magenta Corporation has 1,000 shares of stock outstanding. Julie owns 400 of these shares, and unrelated individuals own the remaining 600 shares. Magenta redeems 100 of Julie's shares for $200,000. In the year of the redemption, Magenta has $230,000 of paid-in capital and $330,000 of E&P. Requirements a. How does the redemption affect Magenta's E&P balance if the redemption qualifies for sale treatment? b. How does the redemption affect Magenta's E&P balance if the redemption does not qualify for sale treatment? Requirements a and b. How does the redemption affect Magenta's E&P balance if the redemption qualifies for sale treatment and if the redemption does not qualify for sale treatement? (If an input field is not used, leave the input field empty. Do not select a label or enter a zero.) Remaining Redemption qualifies for sale treatment Redemption does not qualify for sale treatment Effect on E&P By this amount amount (if Treatment of remaining applicable) amount
Please help me to solve this problem
Vikarmbhai

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS