The Effect of a Bonus Issue to All Shareholders on (A)net

question 4

Multiple Choice

The effect of a bonus issue to all shareholders on (a) net asset backing per share,(b) each shareholder's share of net assets and (c) market capitalisation is:

• A) (a) The net asset backing per share will decrease; (b) each shareholder's share of net assets will remain the same; (c) evidence suggests that on average the market capitalisation will increase.
• B) (a) The net asset backing per share will increase; (b) each shareholder's share of net assets will increase; (c) evidence suggests that on average the market capitalisation will remain the same.
• C) (a) The net asset backing per share will decrease; (b) each shareholder's share of net assets will decrease; (c) evidence suggests that on average the market capitalisation will remain the same.
• D) (a) The net asset backing per share will remain the same; (b) each shareholder's share of net assets will decrease; (c) evidence suggests that on average the market capitalisation will decrease.
• E) None of the given answers.

Comprehend the effect of asset improvements on depreciation and asset valuation.

Understand the disclosure requirements for property, plant, and equipment in financial statements.

Understand the principles of recording exchanges involving nonmonetary assets.

Comprehend various accounting methods for oil and gas properties.

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Definitions:

Watch

A portable timepiece designed to be worn on the wrist or carried, used to measure and display time.

Psychophysics

The scientific study of the relationship between the physical properties of stimuli and the sensations and perceptions they produce.

Signal Detection Research

A field of study that explores how decisions are made under conditions of uncertainty and the processes through which signals are distinguished from noise.

Sensation

The process by which sensory receptors and the nervous system receive and represent stimulus energies from the environment.