A. MC Corporation is planning to issue 30,000 shares of its own P10 par value common stock for two acres of land to be used as a building site.

Instructions:

(a) What general rule should be applied to determine the amount at which the land should be recorded?

(b) Under what circumstances should this transaction be recorded at the fair value of the land?

(c) Under what circumstances should this transaction be recorded at the fair value of the stock issued?

(d) Assume MC intentionally records this transaction at an amount greater than the fair value of the land and the stock. Discuss this situation

B.Shirley Yu, president of SY Corporation, is concerned about several large stockholders who have been very vocal lately in their criticisms of her leadership. She thinks they might mount a campaign to have her removed as the corporation's CEO. She decides that buying them out by purchasing their shares could eliminate them as opponents, and she is confident they would accept a "good" offer. Yu knows the corporation's cash position is decent, so it has the cash to complete the transaction. She also knows the purchase of these shares will increase earnings per share, which should make other investors quite happy. (Earnings per share is calculated by dividing net income available for the common shareholders by the weighted-average number of shares outstanding. Therefore, if the number of shares outstanding is decreased by purchasing treasury shares, earnings per share increases.)

Help me answer the following questions.

(a) Who are the stakeholders in this situation?

(b) What are the ethical issues involved?

(c) Should Yu authorize the transaction?

C.KL Corporation, a client, is considering the authorization of a 10% common stock dividend to common stockholders. The financial vice president of KL Corporation wishes to discuss the accounting implications of such an authorization with you before the next meeting of the board of directors.

Instructions:

(a) The first topic the vice president wishes to discuss is the nature of the stock dividend to the recipient. Discuss the case against considering the stock dividend as income to the recipient.

(b) The other topic for discussion is the propriety of issuing the stock dividend to all "stockholders of record" or to "stockholders of record exclusive of shares held in the name of the corporation as treasury stock." Discuss the case against issuing stock dividends on treasury shares.

D. Computer Company is a small, closely held corporation. Eighty percent of the stock is held by Derek Yu, president. Of the remainder, 10% is held by members of his family and 10% by Kathy Reyes, a former officer who is now retired. The balance sheet of the company at June 30, 2019, was substantially as shown below.

Instructions:

(a) Which stockholder's right was ignored in the issue of shares to Derek Yu?

(b) How may the damage to Reyes' interests be repaired most simply?

(c) If Derek Yu offered Reyes a personal cash settlement and they agreed to employ you as an impartial arbitrator to determine the amount, what settlement would you propose? Present your calculations with sufficient explanation to satisfy both parties.

Assets Liabilities and Stockholders' Equity Cash P 22,000 Current Liabilities P 50,000 Others 450,000 Capital Stock 250,000 P472,000 Retained Eamings 172,000 P472,000