McJunkin Ltd

question 48

Multiple Choice

McJunkin Ltd. declares a 10% share dividend on December 31, 2015. CurrentlyMcJunkin has 30,000 shares outstanding. The market value of the shares on the date of declaration is $3 per share. The value to be assigned to this share dividend is:

• A) $5,000.
• B) $2,000.
• C) $9,000.
• D) $8,000.
• E) $6,000.

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Definitions:

Rent Expense

An operating expense incurred for the use of property or equipment, recognized over the period of the lease agreement.

Capital Lease

A lease agreement that allows a lessee to use an asset in exchange for payment, with terms that transfer substantially all risks and benefits of ownership.

Operating Leases

Leases used for short-term leasing of assets, where the lessee does not assume the risk of ownership, and the asset will be returned to the lessor at the end of the lease term.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets to generate sales revenue, calculated by dividing sales revenue by the average total assets.