Convex Ltd is a parent company to Concave Ltd and decides to sell 30% of their shares to another company who wants to support its operations. How would this transaction affect the preparation of Convex Ltd financial statement for the next accounting period?
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- HOW DOES A COMPANY REALLY DECIDE WHICH INVESTMENT METHOD TO APPLY? Pilgrim Products, Inc., buys a controlling interest in the common stock of Crestwood Corporation. Shortly after the acquisition, a meeting of Pilgrim's accounting department is convened to discuss the internal reporting procedures required by the ownership of this subsidiary. Each member of the staff has a definite opinion as to whether the equity method, initial value method, or partial equity method should be adopted. To resolve this issue, Pilgrim's chief financial officer outlines several of her concerns about the decision. I already understand how each method works. I know the general advantages and disadvantages of all three. I realize, for example, that the equity method provides more detailed information whereas the initial value method is much easier to apply. What I need to know are the factors specific to our situation that should be considered in deciding which method to adopt. I must make a…Bob Smith, The accountant of ABC Ltd. has been tasked with redeeming part of the shares outstanding for his corporation. Bob is unsure how he should charge the cost of the redemption to shareholder's equity accounts. Required:Explain to Bob how the cost should be charged to shareholder’s equity accounts. Please provide specific responses for the following circumstances:1) When the cost is lower than the average price per share.2) When the cost is higher than the average price per share.Which of the following actions would the Board of Directors have to have a shareholder vote in order to enact? A. Hiring a new CEO B. Approving CEO Compensation over $1M C. Selling the company to a holding company D. Purchasing a company as a subsidiary
- Which of the following represents a liability? The obligation to pay for goods that an entity expects to order from suppliers in the near future. The obligation to provide goods that customers have ordered and paid for during the current year. The obligation to pay interest on a five-year note payable that was issued the last day of the current year. The obligation to distribute an entity’s own shares next year as a result of a stock/share dividend declared by the board of directors near the end of the current year.Which of the following is necessary for a company to use fresh start accounting?a. The previous owners must hold at least 50 percent of the stock of the company when it emerges from bankruptcy.b. The reorganization value of the company must exceed the value of all assets.c. The reorganization value of the company must exceed the value of all liabilities.d. The original owners must hold less than 50 percent of the stock of the company when it emerges from bankruptcy.Unless stated otherwise in the prospectus, which of the following accrue to holders of common stock? Check All That Apply The right to vote on members for the Board of Directors. The right to share proportionally in dividends paid. An ownership stake in the company. The right to receive any back dividends that were missed if the company suspends its dividend and then decides to restart paying dividends. First priority on assets following a liquidation and distribution of the firm's assets.
- On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio Issued to the owners of Mason $329,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $32,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $17,000 in connection with stock Issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Presidio Company Mason Company $ 36,200 Items $ 81,900 Receivables 290,000 151,000 Inventory 378,000 178,000 Land 284,000 272,000 Buildings (net) 469,000 280,000 Equipment (net) 194,000 71,100 Accounts payable (179,000) (47,700) Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 (462,000) (329,000) (110,000) в 0 (120,000) (360,000) (585,900) (491,600) Note:…Which, if any, of the following items has no effect on the stock basis of an S corporation shareholder? Operating income. Long-term capital gain. Cost of goods sold. Short-term capital loss. The 20% QBI deduction.Under the memorandum of incorporation of Greenfield Investments Ltd, the directors had the power to borrow up to R5-million, without the consent of the general meeting. The directors themselves lend R10-million to the company, without such consent, and took debentures. Is the company liable for the R10-million?
- If the corporation when formed sets a par value for its shares low and issue common stock for a price above par, what is this amount above par called? Can this amount be treated as a gain, income, or profit for the corporation? Please give the reason for your answer. Assume one year later (2019) the company KY Jeweller’s Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following information which is grouped according to your fist name initial. The company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration: KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues ___ () shares…Examine how do you treat the following items when X Ltd. is merging with Y Ltd. on 1st January 2023 on the assumption: A. Condition u/s 2(1B) and u/s 72A does not satisfy B. Condition u/s 2(1B) satisfy but conditions u/s 72A not satisfy C. Conditions u/s 2(1B) and u/s 72A are satisfied Other Information of X Ltd.: (i) Business Profits (before adjusting losses and expenses) *60,000 (ii) Expenses on merger *2,00,000 (iii) VRS Compensation (Paid during 2020-21) *4,00,000 (iv) Sale consideration of non-depreciable capital assets *20,00,00 (v) Indexed cost of acquisition of non-depreciable capital assets *12,00,000 (vi) Sale consideration of depreciable assets *10,00,000 (vii) WDV of depreciable assets *7,00,000 (viii) Non-speculation business loss relating to 1994-95 *3,00,000 (ix) Unabsorbed depreciation relating to 2020-21 1,50,000 (x) Long term Capital loss relating to 2021-22 *2,00,000 Business profits of Y Ltd. (before adjusting losses and expenses) ₹30,00,000 and long term capital…Judd, Inc. owns 35% of Crosby Corporation. During the calendar year 2025, Crosby had net earnings of $300,000 and paid dividends of $30,000. Judd mistakenly recorded these transactions using the fair value method rather than the equity method of accounting. What effect would this have on the investment account, net income, and retained earnings, respectively? O Understate, overstate, overstate O Overstate, understate, understate O Overstate, overstate, overstate O Understate, understate, understate