the investee. 3. The equity method is appropriate when an investor has the ability to exercise significant influence over the operating and financing decisions of an investee. Because dividends represent financing decisions‚ the investor may have the ability to influence the timing of the dividend. If dividends were recorded as income (cash basis of income recognition)‚ managers could affect reported income in a way that does not reflect actual performance. Therefore‚ in reflecting the close relationship
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THURSDAY 21 AUGUST 2014 This is a fictious case based on real world situations. Although the primary focus is the dividend policy decision the situation of the company has been influenced by its corporate strategy and this case offers the opportunity to also consider the behavioural‚ management‚ and general business issues. The case questions are: As a background to the dividend policy decision briefly evaluate the corporate strategy of Eastboro Machine Tools Corporation. What implications has
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Midterm Review Questions winter 2011 REVIEW 1 As the auditor of Mother Ltd. (Mother)‚ you have been asked to draft a memorandum to the president to explain the future deductibility of loss carryovers of a wholly-owned subsidiary‚ Childco Ltd. (Childco). Mother acquired Childco on January 1‚ 2011 when Childco was experiencing financial difficulties. Childco manufactures paper products‚ whereas Mother is a wholesaler of office supplies and equipment. Both companies are Canadian-controlled
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Ch 10: 3‚ 4‚ 5‚ 7; Ch 14: 4 3. Jersey mining earns $9.50 a share‚ sells for $90‚ and pays a $6 per share dividend? The stock is split two for one and a $3 per share cash dividend is declared. (a) What will be the new price of the stock? New Price: $90/2 = $45 (b) If the firm total earning do not change‚ what is the payout ratio before and after the stock split? Before: $6/9.50 = 63.16% After: $3/4.75 = 63.16% 4. Firm A had the following selected items on its balance sheet: Cash: 28‚000‚000
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to generate enough cash from operations to pay all of its capital expenditures? d. Did the cash flow from operations cover both the capital expenditures and dividend payments‚ if any? e. If it did‚ how did it invest the excess cash? f. If not‚ the sources of cash to pay for the capital expenditures and/or dividends. g. Were the working capital (current asset and current liability) accounts other than cash and cash equivalents primarily sources of cash‚ users of cash?
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permitted to stockholders and acceptable methods for retiring stock. h. Additional Taxes – A corporation must file taxes at a federal and state level where the taxes can sometimes amount to 40%. Also‚ stockholders are required to pay taxes on cash dividends‚ once at the corporate level and again at the personal level. The last three reasons (f‚ g & h) are a disadvantage for a corporation while the first five (5) (a‚ b‚ c‚ d & e) are an advantage to a corporation. There are four steps to follow
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Assignment #7 P13-7A (a) General Journal Date A/C Title Ref Debit Credit Feb 6 Cash 111‚000 Preferred Shares (1‚000 x $111) 111‚000 To record issue of 50‚000 preferred shares at $111 July 15 Preferred Shares (2‚000 x $106) 212‚000 Common Shares 212‚000 To record conversion of 2‚000 preferred shares into 16‚000 common shares at average cost of $106
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a well-known and famous stock amongst defensive investors‚ thanks to its long dividend growth history. Dividend and defensive investors like to invest in companies that have the potential to generate a steady growth in earnings and cash flows. Consequently‚ these companies usually offer increasing dividends and a steady share price appreciation. Emerson is a dividend aristocrat‚ as it has also paid increasing dividends since 1959. Albeit a long fairy tale‚ Emerson Electric has almost lost its shine
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Noncash share transactions; lump sum sales. 5. Treasury share transactions‚ cost method. 6. Preference stock. 7. Equity accounts; classifications; terminology. 8. Dividend policy. 9. Cash and share dividends; share splits; property dividends; liquidating dividends. 10. Restrictions of retained earnings. 11. Presentation and analysis *12. Dividend preferences and book value. 1‚ 2‚ 6 4‚ 5 1‚ 3‚ 4 1‚ 4 2 11‚ 12‚ 17 7‚ 8 3‚ 6‚ 7‚ 9‚ 10‚ 18 2‚ 8 10‚ 11‚ 16‚ 17 1‚ 2‚ 3‚ 5‚ 6‚ 7 1‚ 3 9‚ 11‚
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| |X | | |F. Sold common stock | | |X | |G. Paid a cash dividend to stockholders | | |X | |H. Paid interest to lenders |X |
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