Kazama owns JKL Corporation stock with a basis of $20,000. He exchanges this for $24,000 of STU stock and $8,000 of STU securities as part of a tax-free reorganization. reorganization. What Kazama's basis in the STU stock? is
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- Walton decided to issue additional new common stock. Mr. Adib Rahman, an individual investor purchased 100 shares of this stock from Munawar Associates, the underwriter. Would this transaction be a primary or a secondary market transaction? If Mr. Adib Rahman purchased previously outstanding Walton stock from another investor, then which financial market will this transaction be traded in?Mr. X acquires 200 shares of a company on cum-right basis for ? 60,000. He subsequently receives an offer of right to acquire fresh shares in the company in the proportion of 1:1 at ? 105 each. He does not subscribe but sells all the rights for 7 15,000. The market value of the shares after their becoming ex-rights has also gone down to 7 50,000. What should be the accounting treatment in this case?Charlie owns all the issued shares of X Ltd. These common shares have an ACB and PUC of $60,000 and are worth $740,000. Charlie would like to freeze his interest in the company at today's value so that future increases in value accrue to three employees. In the course of a reorganization of share capital, Charlie exchanged his common shares for preferred shares of X plus debt of $25,000. The preferred shares are redeemable for $715,000. The employees then acquired newly issued common shares of X for $70,000. What is the PUC of the preferred shares owned by Charlie? $ 60000
- Hippo Co. is a holding company. It holds all the shares of Opco. Shareholder H holds all the shares of Hippo Co. What should Opco be directed to do prior to its sale in order to minimize taxable capital gains? a. Transfer all assets to Hippo Co. before sale. b. Transfer all shares in Opco to Shareholder H prior to the sale c. Transfer all the shares of Hippo Co. to shareholder H prior to the sale. d. Pay a tax-free dividend to Hippo Co. from Opco prior to the salePampered Pooches, Inc. proposes a merger with Sit Means Sit, Inc. (SMS). SMS will obtain the approval of its shareholders; and then, by operation of law, SMS shares will become shares of the surviving corporation, Pampered Pooches, Inc. Assume that prior to the merger Paulie Smith owned 25% of SMS stock that he purchased three years before in a private placement. Smith will only own 2% of the Pampered Pooches shares and will not be an officer or director of the merged company. Is it necessary to register the Pampered Pooches shares? May Smith freely resell his Pampered Pooches shares? Would it matter whether the shares were registered in connection with the merger?Choose the correct. McKinley, Inc., owns 100 percent of Jackson Company’s 45,000 voting shares. On June 30, McKinley’s internal accounting records show a $192,000 equity method adjusted balance for its investment in Jackson. McKinley sells 15,000 of its Jackson shares on the open market for $80,000 on June 30. How should McKinley record the excess of the sale proceeds over its carrying amount for the shares?a. Reduce goodwill by $64,000.b. Recognize a gain on sale for $16,000.c. Increase its additional paid-in capital by $16,000.d. Recognize a revaluation gain on its remaining shares of $48,000.
- 2. Santiago transfers real estate with an adjusted basis of $400,000 and fair market value of $550,000 to the newly formed Star Corporation in exchange for 100% of its stock. The corporation assumes the liability on the transferred real estate in the amount of $425,000. What is Santiago's basis for his stock?DeMilo, Inc., owns 100 percent of the 43,000 outstanding shares of Ricardo, Inc. DeMilo currently carries the Investment in Ricardo account at $346,400 using the equity method. Ricardo issues 7,000 new shares to the public for $11.75 per share. How does this transaction affect the Investment in Ricardo account that appears on DeMilo’s financial records?i need the answer quickly
- X, Inc. is negotiating with Y, Inc. to acquire 100% of X, Inc.'s share capital. X, Inc. is currently owned by Y, Inc. and meets the definition of business defined in IFRS 3. The sale of shares is subject to approval by X, Inc.'s shareholders and the government. Because the agreement takes time, prior to the sale of shares, X, Inc and Y, Inc entered into an agreement that: Both parties settle it legally with the consent of the necessary agreements; Determine the purchase price; Determined that the following decisions and actions may be taken by Y, Inc. only with X, Inc's approval until the sale of shares, through: o Changes in the management of Z, Inc; o Dividend payment; and, o New project contracts that exceed IDR 200 billion. Does X, Inc control Z, Inc as a result of this agreement?T holds two business assets, X (with a basis of 30 and a value of 120) and Y (with a basis of 70 and value of 50). T also has outstanding debt of $40 (held by C). T is wholly owned by A whose basis for his T stock is 50 (with a value of $130). Acquiring corporation P will acquire T’s assets in what is assumed to be a qualified section 368 reorganization. If T merges into P for $65 of P stock and $65 in cash, which cash and stock are distributed to A upon the surrender of A’s T shares; and P assumes T’s debt to C. Describe the consequences of the reorganization transaction to T, T’s shareholder A & P. a) Transferor corporation (T) b) Transferor Corporation’s shareholder (A) c) Acquiring Corporation (P)Jacobson Company is considering an investment in the common stock of Biltrite Company. What are the accounting issues surrounding the recording of income in future periods if Jacobson purchases: a. 15% of Biltrite’s outstanding shares. b. 40% of Biltrite’s outstanding shares. c. 100% of Biltrite’s outstanding shares. d. 80% of Biltrite’s outstanding shares.