K-Motors Ltd. reported 2,000,000 no par common shares and 1,000,000 no par, $0.90 preferred shares authorized, on January 1, 2018. On the same date, 300,000 common shares [contributed capital $3,600,000] and 175,000 preferred shares [contributed capital $3,500,000] were outstanding. Your answers must be based on IFRS

1) Assume that the preferred shares were non-cumulative and non-participating. The company declared and paid a cash dividend on December 1, 2018 of $658,800. Dividends had not been declared for the past two years, 2016 and 2017. How much will each shareholder group receive?

a.

$472,500 to Preferred Shareholders and $186,300 to Common Shareholders.

b.

$658,800 to Common Shareholders and ZERO to Preferred Shareholders as they are non-participative.

c.

$439,200 to Common Shareholders and $219,600 to Preferred Shareholders as the common shareholders carry more risk and so they must receive twice as much as the preferred shareholders receive.

d.

Each group receives an equal amount of $329,400 per group.

e.

Preferred Shareholders: $157,500; Common Shareholders: $501,300.

2) Continue with the same information given in [1] above. However, now assume that for this question only that the preferred shares were non-cumulative and fully participating. How much will each shareholder group receive? [ROUND YOUR ANSWERS TO THE NEAREST $]

a.

All $658,800 to Common since the Preferred are non-participating.

b.

Each group receives an equal amount of $329,400 per group.

c.

$242,716 to Preferred and $416,084 to Common.

d.

$324,761 to Preferred and $334,039 to Common.

e.

None of the above.

3) Continue with the same information given in [1] above. However, now assume that for this question only, the preferred shares were cumulative and participating in excess distributable dividends after allocating common share holders a minimum dividend of $0.50 per share. How much will each shareholder group receive? [ROUND YOUR ANSWERS TO THE NEAREST $]

a.

$490,394 to Preferred and $168,406 to Common.

b.

$330,676 to Preferred and $328,124 to Common.

c.

Each group receives an equal amount of $329,400 per group.

d.

$630,000 to Preferred and $28,800 to Common.

e.

None of the above.