Homework Answers
As per HOMEWORKLIB POLICY and guideline, the 1st four questions are answered below:
Q1)
Advantages:
No.1) Separate legal entity: a corporation has separate legal entity in a sense that it can do business by its own name. This makes a separation from owners, directors, employees, etc. This thing not happens in the other form of business (sole-proprietorship or partnership), since there owners are not separated from their business.
No.2) Limited liability: the owners (shareholders) of a corporation are liable up to their investments in shares; they don’t have any personal liability apart from such investments. This is not happening in other form of business – if required their personal property could be taken by the court.
Disadvantages:
No.1) Legal formalities: There are so many legal formalities in case of formation of a corporation and its running – such as registration process, stock exchange enlistment, periodic board meeting, and financial statements.
No.2) Taxation: corporations pay taxes on their incomes and again shareholders pay taxes on their dividends; therefore, there is double taxation.
Q2)
Par value (face value) of shares issued by a corporation is legal capital; the aggregate of such amount can’t be distributed in any means and must be kept as it is in the books of accounts till maturity.
This is required for the purpose of creating reserve – if there is any default or the corporation goes into liquidation, creditors would be paid out of this reserve.
Q3)
This is required for proper balancing of ownerships.
Common stockholders have voting rights while preferred stockholders don’t have such rights.
Preferred stockholders have preference on receiving dividends while common stockholders don’t have such preference.
Q4)
The rate of dividend is 8%.
Dividend per share = Par value × Rate of dividend
= 100 × 8%
= 8 (Answer)
Add Answer to:
List two corporate characteristics considered to be advantages of a corporation and list two corporate characteristics...
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List advantages and disadvantages of a corporation BE11.1 (L01), K Hana Ascot is planning to start...
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Directed Reading Guide LO1. What is a corporation? a) List some of a corporation's unique characteristics:...
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Exercise 11-2 Andrea has prepared the following list of statements about corporations. Identify each statement as...
Exercise 11-2
Andrea has prepared the following list of statements about
corporations.
Identify each statement as true or false.
1.
Corporation management is both an advantage and a disadvantage
of a corporation compared to a proprietorship or a
partnership.
TrueFalse
2.
Limited liability of stockholders, government regulations, and
additional taxes are the major disadvantages of a corporation.
TrueFalse
3.
When a corporation is formed, organization costs are recorded
as an asset.
TrueFalse
4.
Each share of common stock gives the...
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List advantages and disadvantages of a corporation BE11.1 (L01), K Hana Ascot is planning to start a business. Identify for Hana the advantages and disad- vantages of the corporate form of business organization, Journalise issuance of par value common ock BE11.2 (LO 2), AP on May 10, Pilar Corporation issues 2,500 shares of 55 par value common stock for cash at S13 per share. Journalize the issuance of the stock. Journalise issuance of no-par common stock BE11.3 (LO 21. AD...
The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following amounts: Contributed Capital Preferred Stock (par $20; authorized 10,000 shares, ? issued, of which 1,800 shares are held as treasury stock) Additional Paid-In Capital, Preferred Common Stock (no-par; authorized 20,000 shares, issued and outstanding 6,700 shares) Retained Earnings Treasury Stock, 1,800 Preferred shares at cost $118,000 18, 290 716,900 37,000 (9,850) Assume that no shares of treasury stock have been sold in the past...
Directed Reading Guide LO1. What is a corporation? a) List some of a corporation's unique characteristics: iv) v) vi) vil b) Give a brief explanation of the following: i) Authorized stock- ii) Issued stock- ii) Outstanding stock - iv) Preferred stock- v) Par Value- vi) Common stock- c) What are the two parts of stockholder's equity?
Exercise 11-2
Andrea has prepared the following list of statements about
corporations.
Identify each statement as true or false.
1.
Corporation management is both an advantage and a disadvantage
of a corporation compared to a proprietorship or a
partnership.
TrueFalse
2.
Limited liability of stockholders, government regulations, and
additional taxes are the major disadvantages of a corporation.
TrueFalse
3.
When a corporation is formed, organization costs are recorded
as an asset.
TrueFalse
4.
Each share of common stock gives the...
Next to the following list of eight characteristics of business organizations, select a brief description of how each characteristic applies to corporations. Descriptions High because buying stock is attractive Characteristic 1. Ability to raise large capital amounts 2. Duration of life 3. Government regulation 4. Legal status 5. Mutual agency 6. Owner authority and control 7. Owner liability 8. Tax status of income High because buying stock is attractive Indefinite More severe than partnerships and proprietorships Entity with similar rights...
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