The Dreitz Company offered 12,000 shares in a rights offer. By prior agreement, the underwriter, Smith-Lara, purchased the 832 unsold shares. For its participation in this rights offer, Smith-Lara is most likely entitled to: Multiple Choice the gross margin. the optional spread. a standby fee. the subscription price. an oversubscription fee.

The Dreitz Company offered 12,000 shares in a rights offer. By prior agreement, the underwriter, Smith-Lara, purchased the 832 unsold shares. For its participation in this rights offer, Smith-Lara is most likely entitled to: Multiple Choice the gross margin. the optional spread. a standby fee. the subscription price. an oversubscription fee.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Jones Company obtains all of the common stock of Hudson, Inc., by issuing 50,000 shares of its own stock. Under these circumstances, why might the determination of a fair value for the consideration be difficult?
Tech provides laptop-related maintenance services to Shemco. In exchange, TrueTech received 100 shares of Shemco no-par common stock. Determine the transaction price in the contract for the following scenarios: (a) 100 shares of Shemco's stock are traded on an active market for $55,000. The standalone value of the maintenance services is $56,000. (b) Shemco is privately held, making it difficult to estimate the fair value of the shares given in exchange for the maintenance services.
Jones Company obtains all of the common stock of Hudson, Inc., by issuing 50,000 shares of its own stock. Under these circumstances, why might the determination of a fair value for the consideration transferred be difficult?
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.
Burger Steak Co. has granted share options to employees. The total compensation expense to the vesting date of December 31, Year 4 has been calculated at P6,000,000. The entity has decided to settle the award early on December 31, Year 3. The compensation expense charged since the date of grant on January 1, Year 1 was P1,500,000 for Year 1 and P1,300,000 for Year 2. The compensation expenses that would have been charged for Year 3 is P1,200,000. What is the compensation expense for Year 3, assuming the share options are not exercised but instead, the entity paid the employees P5,000,000 on December 31, Year 3? A. 3,200,000 B. 0 C. 2,200,000 D. 5,000,000
Ashleigh, a public limited company, has granted share options to its employees with a fair value of P6 million. The options vest in three years' time. The Monte-Carlo model was used to value the options, and these estimates had been made • Grant date (January 20X4): estimate of employees leaving the entity during the vesting period – 5% • January 1, 20X5: revision of estimate of employees leaving to 6% before vesting date • December 31 20X6: actual employees leaving 5%Requirement: Provide all the entries from 20x4 to 20x6.
b) Demonstrate that in principle the shareholders will be equally well off by subscribing to the issue or by selling their rights. Assume the shareholder has 100 shares c) Explain the impact on the value of the right if the issue is undertaken on the specified terms and the share (cum-rights) price falls to € 1.8 shortly after the shareholders are invited to subscribe to the new issue
Ladd, Inc., bought 400 shares of Dey, LLC, for $20 per share and incurred brokerage commissions of $100. Ladd later sold its stake in Dey for $22 per share and incurred brokerage commissions of $175. The effect of the sale on Ladd's net income is a(n) (increase/decrease) of $ .
Augmented Co. acquired a piece of land by issuing 20,000 shares with par value of P10 per share and quoted price of P90 per share. Case 1: The land has a fair value of P2,000,000. Provide the entry. Case 2: The fair value of the land cannot be determined reliably. Provide the entry.
EG Corporation redeemed 200 shares of stock from one of its shareholders in exchange for $210,000. The redemption represented 20% of the corporation’s outstanding stock. The redemption was treated as an exchange by the shareholder. EG’s total E&P at the time of the distribution was $2,000,000. By what amount does EG reduce its total E&P as a result of the redemption? EG Corporation redeemed 200 shares of stock from one of its shareholders in exchange for $210,000. The redemption represented 20% of the corporation’s outstanding stock. The redemption was treated as an exchange by the shareholder. EG’s total E&P at the time of the distribution was $600,000. By what amount does EG reduce its total E&P as a result of the redemption?
Assume an investor purchases an investee’s net assets with a cash payment of $1,200 and issuance to the investee’s shareholders of 240 shares of $1 par value common stock with a current fair value of $28.50 per share. In addition, we assume the purchaser paid an additional $60 of transaction costs to a third party (e.g., appraiser or broker) and provided the seller with contingent consideration with a fair value of $240 at the date of acquisition. The investee has the following net assets at current appraised fair value and historical book value: investee fair value investee book value plant and equipment 900 480 land 1260 900 patent 1440 120 total 3600 1500 a. Provide the journal entry on the investor’s books for the purchase of the individual net assets of the investee. Assume the acquired net assets do not qualify as a business. b. Provide the journal entry on the investor’s books for the purchase of the individual net assets of the investee. Assume the acquired net…

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