Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Chapter 17, Problem 35P
Summary Introduction
To determine: A Incorporation’s ex-dividend share price.
Introduction:
The date between the announcement date and payment date is ex-dividend date. A stock that trades on ex-dividend date is termed as stock on ex dividend. A stock becomes ex-dividend when the person gets the payment of dividend. When the ex-dividend date starts, the price ultimately falls down.
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Presented below are two independent situations.
(1) Grand Cosmetics acquired 10% of the 200,000 ordinary shares of Cey Fashion at a total
cost of $12 per share on March 18, 2020. On June 30, Cey declared and paid a $60,000
dividend. On December 31, Cey reported net income of $110,000 for the year. At
December 31, the market price of Cey Fashion was $15 per share. The shares are classified
as non-trading.
(2) Unruh, Inc. obtained significant influence over Olsen Corporation by buying 25% of
Olsen's 40,000 outstanding ordinary shares at a total cost of $7 per share on January 1.
2020. On June 15, Olsen declared and paid a cash dividend of $30,000. On December 31.
Olsen reported a net income of SS0.000 for the year.
Instructions
Prepare all the necessary journal entries for 2020 for (a) Grand Cosmetics and (b) Unruh, Inc
Cblue Company owned 900,000 shares of Flight Company. On December 31, 2004, when the investment had a carrying amount of P5 per share, the entity declared these shares to the shareholders as a dividend to be distributed in 2005. Cblue originally paid P8 for each share. Flight has 3,000,000 shares issued and outstanding which are traded on a national stock exchange. The quoted market price for a Flight share was P7 on the declaration date and P9 on the distribution date in 2005. What amount should be recognized as gain from distribution of property dividend in 2005?
Lea Inc, owned 900,000 shares of Mia Corporation stock. On December 31, 2010, when Lea's account "Investment in Common Stock of Mia Corporation" has a carrying value of P5 per share, Lea distributed these shares to its stockholders as a dividend. Lea originally paid P8 for each share. Lea has 300,000 shares issued and outstanding, which are traded on a national stock exchange. The quoted market price for a Mia share was P7 on the declaration date and P9 on distribution date.
What would be the reduction in Lea's stockholder's equity as a result of the above transactions?
Group of answer choices
A. P3,600,000
B. P7,200,000
C. P2,100,000
D.P4,500,000
Chapter 17 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 17.1 - Prob. 1CCCh. 17.1 - Prob. 2CCCh. 17.2 - Prob. 1CCCh. 17.2 - In a perfect capital market, how important is the...Ch. 17.3 - Prob. 1CCCh. 17.3 - Prob. 2CCCh. 17.4 - Prob. 1CCCh. 17.4 - Prob. 2CCCh. 17.5 - Is there an advantage for a firm to retain its...Ch. 17.5 - Prob. 2CC
Ch. 17.6 - Prob. 1CCCh. 17.6 - Prob. 2CCCh. 17.7 - Prob. 1CCCh. 17.7 - Prob. 2CCCh. 17 - Prob. 1PCh. 17 - ABC Corporation announced that it will pay a...Ch. 17 - Prob. 3PCh. 17 - RFC Corp. has announced a 1 dividend. If RFCs...Ch. 17 - Prob. 5PCh. 17 - KMS Corporation has assets with a market value of...Ch. 17 - Natsam Corporation has 250 million of excess cash....Ch. 17 - Suppose the board of Natsam Corporation decided to...Ch. 17 - Prob. 9PCh. 17 - Suppose BE Press paid dividends at the end of each...Ch. 17 - The HNH Corporation will pay a constant dividend...Ch. 17 - Prob. 12PCh. 17 - Prob. 13PCh. 17 - Prob. 14PCh. 17 - Suppose that all capital gains are taxed at a 25%...Ch. 17 - Prob. 16PCh. 17 - Prob. 17PCh. 17 - Prob. 18PCh. 17 - Prob. 19PCh. 17 - A stock that you know is held by long-term...Ch. 17 - Clovix Corporation has 50 million in cash, 10...Ch. 17 - Assume capital markets are perfect. Kay Industries...Ch. 17 - Redo Problem 22., but assume that Kay must pay a...Ch. 17 - Harris Corporation has 250 million in cash, and...Ch. 17 - Redo Problem 22, but assume the following: a....Ch. 17 - Prob. 26PCh. 17 - Use the data in Table 15.3 to calculate the tax...Ch. 17 - Explain under which conditions an increase in the...Ch. 17 - Why is an announcement of a share repurchase...Ch. 17 - AMC Corporation currently has an enterprise value...Ch. 17 - Prob. 31PCh. 17 - Prob. 32PCh. 17 - Explain why most companies choose to pay stock...Ch. 17 - Prob. 34PCh. 17 - Prob. 35P
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