It is frequently stated that the one purpose of the preemptive right is to allow individuals to maintain their proportionate share of the ownership and control of a corporation. a. How important do you suppose control is for the average stockholder of a firm whose shares are traded on the New York Stock Exchange? b. Is the control issue likely to be of more importance to stockholders of publicly owned or closely held (private) firms?

It is frequently stated that the one purpose of the preemptive right is to allow individuals to maintain their proportionate share of the ownership and control of a corporation. a. How important do you suppose control is for the average stockholder of a firm whose shares are traded on the New York Stock Exchange? b. Is the control issue likely to be of more importance to stockholders of publicly owned or closely held (private) firms?

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter11: Accounting For Transactions Using A General Journal

Section11.3: Accounting For The Declaration And Payment Of A Dividend

Problem 5AYU

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One of the essential elements of control is power. According to PFRS 10, aninvestor has power if A. The investor’s interest in the earnings of the investee is not fixed but rather varies depending on the level of the earnings. B. The investor has existing rights that give it the current ability to direct the investee’s relevant activities. C. The investor holds more than half of the outstanding shares of the investee. D. The investor takes advantage of the fluctuation of price of the stock.
Which of the following represents one of the basic rights of stockholders? a. Stockholders may sell their stock back to the company if they wish. b. Stockholders may authorize a business contract on behalf of the corporation. c. Stockholders may determine at what price the company issues stock. d. Stockholders may participate in management by voting on corporate matters.
What advantages does a company achieve when it possesses significant influence over another company through voting stock ownership?
Should the qualifications of the board of directors play a role in your decision whether to buy the stock of a particular corporation? Why or why not?
Which of the following is closest to IFRS 3 Business Combinations definition of control? A company is deemed to have control over another only when it owns a majority of the voting shares of another company. B. A company is deemed to have control when it can elect a majority of the Board members of another company. C. Control is the ability to direct the activities of a company that most significantly affect the investor's returns. D. Control exists only when a company has the continuing power to determine the operating and financing policies of another company and attempts to exercise such powers.
Which of the following statements is NOT CORRECT? "Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the fiem's shares. Publicy owned companies have sold shares to investors who are not associated with management, and they must register with and report to a regulatory agency such as the SEC. When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public," and the market for such stock is called he new issue market. It is possible for a firm to go public and yet not raise any additional new capital When a corporation's shares are owned by a few individuals who own most of the stock or are part of the firm's management, we say that the fim is "closely, or privately, held
Which of the following statements is CORRECT? A The stock of publicly owned companies does not need to be registered with and reported to a regulatory agency such as the SEC. B When a corporation's shares are owned by a few individuals, we say that the firm is publicly traded. C "Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares. D When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public, or an IPO," and the market for such stock is called the new issue or IPO market. E If a firm goes public, it will always raise additional new capital for the firm itself.
16. Which of the following statements is NOT correct about the rights granted to common stockholders? a. Stockholders may transfer their right to vote to a second party by means of a proxy. b. Dividends due to common stockholders are cumulative. c. Common stockholders have the right to elect a firm's directors. d. In large, publicly traded firms, managers typically have some stock but their personal holdings are generally insufficient to win voting control.
Which of the following statements is NOT CORRECT? "Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares. Publicly owned companies have sold shares to investors who are not associated with management, and they must register with and report to a regulatory agency such as the SEC. e When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public," and the market for such stock is called the new issue market. O It is possible for a firm to go public and yet not raise any additional new capital. O When a corporation's shares are owned by a few individuals who own most of the stock or are part of the firm's management, we say that the firm is "closely, or privately, held.
Under IFRS 10, parent corporation is the entity that controls one or more entities. How does IFRS 10 define control? Choose the best answer A. An investor controls an investee when it owns more than 50% of all the outstanding capital stocks, whether common or preferred. B. An investor controls an investee when it has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. C. An investor controls an investee when it has the ability to influence the financial and operating policies of an entity so as to obtain benefits from its activities. D. An investor controls an investee when it is exposed, or has the right to variable return from the investment with the investee and has the ability to affect those returns through the power over the investee.
Which of the following statements is NOT CORRECT? (A) Going public establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares (B) Publicly owned companies have sold shares to investors who are not associated with management, and they must register with and report to a regulatory agency such as the SEC. (C) When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public." and the market for such stock is called the new issue market (D) It is possible for a firm to go public and yet not raise any additional new capital (E) When a coporation';s shares are owned by a few individuals who own most of the stock or are part of the firm's management, we say that the firm is "closaly, or privately, held.
Which of the following is not a characteristic of the commonstock of a large, publicly owned corporation?a. The shares may be transferred from one investor toanother without disrupting the continuity of businessoperations.b. Voting rights in the election of the board of directors.c. A cumulative right to receive dividends. d. After issuance, the market value of the stock is unre-lated to its par value.