Explore BrainMass

Impact of transactions

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Problem 16-9
Guo limited provides you with the following condensed balance sheet information.
Assets Liabilities and shareholders equity
Current assets $40,000
Investments in ABC company- trading 60,000
Equipment (net) 250,000
Intangibles 60,000
total assets $410,000 Current and long term liabilities $100,000
Shareholders equity
Common shares* $20,000
Contributed surplus 110,000
Retained earnings 180,000 310,000
Total liabilities and
shareholders equity $410,000
* 10,000 shares issued and outstanding

For each transaction below, indicate the dollar impact (if any) on the following five items: (1) total assets, (2) common shares, (3)contributed surplus, (4) retained earnings, and (5) shareholders' equity. (each situation is independent.)

(A) The company declares and pays a $0.50 per share dividend.
(B) The company declares and issues a 10% stock dividend when the share's market price is $12 per share.
(C) The company declares and issues a 40% stock dividend when the share's market price is $17 per share.
(D) The company declares and distributes a property dividend. The company gives one share of ABC shares for every two shares of company shares held. ABC is selling for $12 per share on the date the property dividend is declared.
(E) The company declares a 3-for-1 stock split and issues new shares.
Intermediate Accounting - 7th Canadian edition Volume 2 Kieso, Weygandt
Problem 16-9


© BrainMass Inc. brainmass.com October 24, 2018, 7:26 pm ad1c9bdddf


Solution Summary

Indicates the dollar impact on total assets, common shares, contributed surplus, retained earnings, and shareholders' equity of transactions.

See Also This Related BrainMass Solution

NAFTA and international finances

1. What is the logic of managing transaction exposure?
2. Will a rise in the national standard of living worsen or improve the country's environmental conditions?
3. Has NAFTA been a success? Explain
4. Which are the main pitfalls of investing in transition economies?

View Full Posting Details