Underwriting and Other Share Issue Costs Paid to a Broker

question 4

Multiple Choice

Underwriting and other share issue costs paid to a broker or a financial institution should be reported in a balance sheet as:

• A)a liability
• B)an asset
• C)an increase in retained earnings
• D)a reduction of share capital.

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Definitions:

Present Value Tables

Tables used to find the present value of a future amount of money or stream of cash flows given a specified rate of return.

Original Investment

The initial amount of money used to purchase an asset or start a project, forming the basis for calculating returns or profit.

Salvage Value

The estimated residual value of an asset at the end of its useful life.

Computed Net

An amount calculated after accounting for all relevant adjustments, deductions, and allowances.