L True or False. 1. 2. 3. 4. 9. 10. The fixed assets are recorded in the corporation books at their gross book values. The accounts receivable is recorded at net amount together with the allowance for doubtful accounts. The amount per share which a corporation agrees to pay, if it elects to redeem the stock, is called redemption price. If a corporation issues only one class of stock, this is the Preferred Stock. A corporation issuing preferred stock may at times reserve the right to redeem it later under specified conditions. Such stock is known as callable or redeemable preferred stock. There is always the possibility that a subscriber will pay part of the subscription price, and fails to pay the balance on the call date specified. In this case, the stockholder is considered to have defaulted, and the unpaid amount is called delinquent subscription. A subscriber is considered a stockholder and he possess all the rights of a stockholder. A corporation may reacquire some of its own outstanding stock by purchase or by donation from its stockholders, or by accepting its own stock in payment of a debt owned by a stockholder. A business enterprise originally set up and operated as a sole proprietorship or a partnership may incorporate, for reasons such as: (a) to raise additional capital; (b) to take advantage of the limited liability of corporate stockholders; (c) to acquire better management expertise; and others. As the donated shares are sold, the proceeds are credited to a paid-in capital account, donated capital, which is shown in the income statement. A Corporation may also reacquire some of its own outstanding stock by way of donation from the stockholders. The shares of stock received are called donated treasury stocks. 1 11 1