Assume the following facts and respond to the task below: The buy-back is finalized. The market value
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Question:
Assume the following facts and respond to the task below:
- The buy-back is finalized. The market value of the shares at all relevant times leading up to the buy-back is $31 per share.
- The buy-back price was $28 per share ($5 debit to share capital account, with the rest paid from retained earnings).
- Any deemed dividend component of the buy-back payment would be fully franked.
Using the template table attached, calculate the consequences per share of participating in the buy-back per share for three kinds of entities (individual, superannuation fund, and company). Calculate the income tax consequences (including capital gains), and net cash consequences of participating in the buy-back compared to selling the shares at the market value. Assume the relevant shares were acquired at a value of $20 each 2 years ago.
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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