Was hoping for clarification about a stock capital concept, assume the following information: A potential investor is interested in buying all the common shares of a private company (ASPE), and becoming the owner. One of the due diligence discovered is: Currently, the company owns both preferred and common shares. There are 500 preferred shares with a cost and redemption value of $10 and $12 per share, respectively, and a 6% mandatory, cumulative dividend yield. These shares will be retained by the current owners of the company. Furthermore, the capital stock currently stated on the financial statements are $55,000 I was wondering, given this information, are there any accounting entries or changes to the SFP that need to be made? From what I know, there should be a dividend payable for the preferred shares. Is there anything else I am missing? Should there be any changes made to the capital stock account? Will this effect the purchase price of company (purchase price is based on net book value of company). Any help would be appreciated
Was hoping for clarification about a stock capital concept, assume the following information:
A potential investor is interested in buying all the common shares of a private company (ASPE), and becoming the owner.
One of the due diligence discovered is: Currently, the company owns both preferred and common shares. There are 500
Furthermore, the capital stock currently stated on the financial statements are $55,000
I was wondering, given this information, are there any accounting entries or changes to the SFP that need to be made? From what I know, there should be a dividend payable for the preferred shares. Is there anything else I am missing? Should there be any changes made to the capital stock account? Will this effect the purchase price of company (purchase price is based on net book value of company).
Any help would be appreciated
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