West Fraser Timber Co. Ltd. is a forest products company operating in British Columbia, Alberta, and the southeastern United States, producing lumber and related wood products. In Exhibit 10-8 on p. 660, you will find the consolidated balance sheets, and in Exhibit 11-11, you will find the statement of changes in equity and an excerpt from Note 8 to West Fraser€™s 2009 financial statements. All amounts are in millions.
In Exhibit 11-11
Consolidated Statement of Changes in Equity
For the years ended December 31, 2009 and 2008

Required:
a. West Fraser has a limited number of authorized shares on each class of shares. Why do many companies today prefer to have an unlimited authorized number of shares?
b. What was the average value of the shares issued and outstanding as at December 31, 2008? What was the average price of the shares issued in 2009? Explain why those two values are not the same.
c. West Fraser has a share option plan for its directors, officers, and employees. What is a share option plan and why would the company issue options to these groups? What compensation expense did West Fraser record in 2009 related to stock options?
d. In 2008 and 2009, West Fraser had negative earnings. How much did it lose in each year? How much did the company pay in dividends in each of those years? How is it possible to pay dividends when earnings are negative? Why is West Fraser continuing to pay dividends when earnings are negative?

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Issued capitalTranslation of foreign operations Total equity ,590.02,096.1 Number of shares Retained earninngs in millions of Canadian dollars) Balance January 1, 2008 Changes in equity for 2008 Amount 42,805,086 5 599.3 S (93.2) Foreign exchange translation gain on investment in self-sustaining 94.9 0.1 foreign operations Share purchase loans received Earnings for the year Dividends Balance December 31, 2008 949 0.1 (137.1) (24.0) 1,428.9 24.0) 2,030.0 42,805,086 5994 1.7 Changes in equity for 2009 Foreign exchange translation loss on investment in self-sustaining foreign operations Issuance of Common shares Earnings for the year Dividends Balance-December 31, 2009 (61.5) 0.3 (340.8) 9.8) S 599.7 (59.8) 1,078.3 1,618.2 61.5) 10,723 0.3 (340.8) (9.8 42,815,809