Seminar.Week11-April11, 2011 - FMGT 4410 Seminar Questions...

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FMGT 4410 –Seminar Questions Week 11 Week of April 11, 2011 Question 1 At the beginning of its first taxation year, Newco Ltd., a newly incorporated company, issued 100 common shares to Mr. A for $10,000. On June 1 of the same year, Newco issued an additional 100 common shares to Mr. B for $15,000 (which is the fair value of the shares on that date). On December 30 of the same year, Mr. C acquired all of Mr. A's common shares for $20,000. At the end of this year (December 31), what is the paid-up capital and the ACB of the shares owned by Mr. B, and what is the paid-up capital and the ACB of the shares owned by Mr. C. 1. PUC 100 shares Mr B ----------------------- New Co $15,000 $15,000 Mr. B Mr. C ACB - $15,000 ACB - $20,000 PUC - $12,500 PUC - $12,500 Question 2 XYZ Corp. is a CCPC with a fiscal year end April 30. On March 31, 2010, its Capital Dividend Account had a nil balance in it. XYZ owned a position in two securities as follows: (a) 100,000 shares in Intel Corporation, which on March 31, 2010 were selling in the market for $25.00 each. These shares had originally cost $15.00 each. (b)
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Seminar.Week11-April11, 2011 - FMGT 4410 Seminar Questions...

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