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Unformatted text preview: ided by new # of shares [1000 * 1.1]
Basis per share after 10% stock dividend $22,000
/ 1,100 shares
$ 20.00/share Choice "b" is incorrect. This choice divides the original basis of $22,000 by the old number of shares,
without considering the 10% stock dividend. [$22,000 / 1,000 = $22/share]
Choice "c" is incorrect. This choice uses the fair market value rather than the proper basis as the
allocation base for the stock, but it does use the proper (new) amount of shares after the stock dividend.
[$33,000 / 1,100 shares = $30/share]
Choice "d" is incorrect. This answer choice uses the fair market value rather than the proper basis as the
allocation base for the stock, and it also improperly uses the old number of shares, without considering
the stock dividend. [$33,000 / 1,000 shares = $33/share] CPA-05522 Type1 M/C A-D Corr Ans: B PM#110 R 3-01 77. CPA-05522 Released 2007 Page 22
Beta, a C corporation, reported the following items of income and expenses for the year:
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.
- Fall '10
- The Land