Question
1. A company wishes to accept land as an Equity Capital Contribution. The company is privately held, meaning is Common Stock is not traded in
1. A company wishes to accept land as an Equity Capital Contribution. The company is privately held, meaning is Common Stock is not traded in the market; no one knows how much its Common Stock is worth. The land is given a Fair Value by the Companys Controller. What is used as the measure, or amount, of the Contribution for accounting purposes:
a. The Fair Value of the Land.
b. The Value of the Common Stock.
c. The Collateral Value of the Land if used to obtain a mortgage.
2. When a company is liquidated in Bankruptcy what happens to the investment of Preferred Stock investors:
A. They receive a payout after debt capital claims are paid.
B. They receive a payout before Common Stock holders do.
C. A. and B.
3. Net Income is $ 10 million. The dividends declared for Preferred Stock is $ 2 million. What is the Net Income attributable to the Common Stock Holders:
a. $ 10 million.
b. $ 2 million.
c. $ 8 million.
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