Reinhart Industries Limited is conducting a special meeting of its board of directors to address some concerns raised by the shareholders. Shareholders have submitted the following questions. Answer each question.
1. Why are common shares and retained earnings shown separately in the shareholders' equity section of the balance sheet?
2. Lou Harris, a Reinhart shareholder, proposes to give some land she owns to the company in exchange for company shares. How should Reinhart Industries Limited determine the number of shares to issue for the land?
3. Preferred shares generally are preferred with respect to dividends and in the event of a liquidation. Why would investors buy common shares when preferred shares are available?
4. One of the Reinhart shareholders owns 100 shares of Reinhart, and someone has offered to buy her shares for their book value. What formula should be used to compute the book value of her shares?