chapter%2013 - Accounting 211 Chapter 13 Shareholders...

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Accounting 211 Chapter 13 Shareholders’ Equity In-Class Material 1. Accounting for Share Costs (page 778-779) Example: Sold 100 non-par value common shares for $25 per share. Issuer paid 2% commission to broker ($50) A. Offset or Net Method – most common method Charge the issuance costs against the money received from selling the shares: B. Retained Earnings Method - also acceptable Charge the issuance costs directly to retained earnings 2. Basket Sales of Share Capital (page 777-778) Example: ABC Corporation received $46,000 for issuance of 1,000 common and 500 preferred shares. A. Proportional Method: if reliable market values are available for both classes. Assume: The market value of the common and preferred shares is $40 and $20 per share respectively. B. Incremental method: if only have the market value for one of the shares, use that market value and allocate the remaining balance of the selling price to the other security: Assume: The market value of the common is $40 per share with no current reliable market value available for the preferred shares. C.
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This note was uploaded on 11/05/2011 for the course ACCT 211 taught by Professor Kristjanson during the Spring '11 term at Camosun College.

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chapter%2013 - Accounting 211 Chapter 13 Shareholders...

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