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What is the significance of "par value" for accounting purposes

What is the significance of "par value" for accounting purposes?

A) The par value determines the amount of contributed surplus.

B) Par value has no economic significance for accounting purposes.

C) Par values determines the amount of cash received from investors.

D) Par value shares are not permitted under IFRS or ASPE.

 

2) If 10,000 shares with par value of $15/share are issued for $20/share, how much will be presented as "contributed capital" for financial statement purposes?

A) $10,000

B) $50,000

C) $150,000

D) $200,000

3) What is a "stock split"?

A) It is an increase in the number of shares issued for which book value consideration is received from investors.

B) It is an increase in the number of shares issued for which no consideration is received from investors.

C) It is an increase in the number of shares issued for which par value consideration is received from investors.

D) It is an increase in the number of shares issued for which market value consideration is received from investors.

 

4) Which statement about a "stock split" is correct?

A) The economic position of the investors is diluted after a stock split.

B) The economic position of the investors is increased after a stock split.

C) The economic position of the investors is decreased after a stock split.

D) The economic position of the investors is unaffected after a stock split.

5) Elville Inc. was incorporated under provincial legislation with a December 31 year-end. The company has a single class of shares. As at December 31, 2011, it had 900,000 shares issued and outstanding. These shares had a book value of $18,000,000 on the balance sheet.

 

During 2012, Elville repurchased 10% of the issued shares from one of the minority shareholders at a cost of $25 per share. The company held these in treasury and later found a buyer for half of these shares at $30. The other half were sold at $21 to another investor.

 

Requirement:

Record the share transactions using the single-transaction method for treasury stock, which is the preferred accounting

Dec 11 2019 View more View Less

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