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7252569-MIdterm-1 (dragged) 50 - allocate proceeds among...

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 15-16 4. Callable at the option of the corporation 5. Retractable at the option of the shareholder 6. Nonvoting 7. Cumulative 8. Participating Preferred shares sometimes have more of the characteristics of debt than equity. When an issue meets the definition of a financial liability (Section 3863), it must be accounted for in all respects as if it were debt. C. Accounting for the Issuance of Shares 1. With few exceptions, the CBCA requires that all shares issued by companies incorporated under it be without a par or nominal value. The full amount received is credited to the appropriate share capital account. 2. Sales on a Subscription Basis. Under this purchase (sale) process, only a partial payment is made originally, and the shares are not issued and the rights associated with them are not received until the issuing company receives the full subscription price. 3. Lump-Sum Sales. Either the proportional or the incremental method can be used to
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Unformatted text preview: allocate proceeds among the different securities. 4. Noncash Share Transactions. When shares are issued for services or property other than cash, the property or services should be recorded at either their fair market value or the fair market value of the shares issued, whichever is more clearly determinable. 5. Costs of Issuing Shares. These costs are treated as a reduction of the amounts paid in, as an organization cost, or charged directly against retained earnings. Share issue costs are identified as capital transactions in Handbook Section 3610, which recommends that these charges be excluded from the determination of net income. D. Reacquisition of Shares C o r p o r a t i o n s m a y b u y t h e i r o w n s h a r e s f o r a variety of reasons, including meeting employee stock option contracts, increasing earnings per share, meeting the share needs of a merger, buying out a particular interest, or satisfying claims of a dissenting shareholder....
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