John acquired 200,000 shares in M Corp. on 1 May 2012 for P400,000. On 10 July...
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John acquired 200,000 shares in M Corp. on 1 May 2012 for P400,000. On 10 July 2020, M. Corp was taken over by W, Inc. Clearance was obtained from Philippine Competition Commission that this was a bona fide commercial arrangement. John received 1 ordinary share (worth P49) in W, Inc. and cash of P16 for each M Corp. share. John's wife, Matilda, made the following purchases of ordinary shares in R Corp., a quoted company. Date 15 May 2012 1 October 2020 Number 18,000 20,000 Cost P19,000 257,500 On 12 July 2020, there was a 1 for 1 bonus issue. On 30 September 2020 Matilda sold 32,000 of the shares for P420,00. John and Matilda each have taxable income of P200,000 in 2020. John had P165,600 of allowable losses brought forward at 6 April 2020. Explain whether there would have been any advantages for John if instead of receiving cash on the take over of W, Inc. shares he had received loan stock. John acquired 200,000 shares in M Corp. on 1 May 2012 for P400,000. On 10 July 2020, M. Corp was taken over by W, Inc. Clearance was obtained from Philippine Competition Commission that this was a bona fide commercial arrangement. John received 1 ordinary share (worth P49) in W, Inc. and cash of P16 for each M Corp. share. John's wife, Matilda, made the following purchases of ordinary shares in R Corp., a quoted company. Date 15 May 2012 1 October 2020 Number 18,000 20,000 Cost P19,000 257,500 On 12 July 2020, there was a 1 for 1 bonus issue. On 30 September 2020 Matilda sold 32,000 of the shares for P420,00. John and Matilda each have taxable income of P200,000 in 2020. John had P165,600 of allowable losses brought forward at 6 April 2020. Explain whether there would have been any advantages for John if instead of receiving cash on the take over of W, Inc. shares he had received loan stock.
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Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
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