MORE THAN ONE SECURITY SOLD FOR A SINGLE  More than one security might be sold for a single price. The cash received usually is the sum of the separate market values of the two securities. Each is then recorded at its market value.  If only one security’s value is known, the second security’s market value is from the total selling price. inferred AP&P issues 4 million of its common shares, $1 par per share, and 4 million of its preferred shares, $10 par, for $100 million. Today’s issue of the lists AP&P’s common Wall Street Journal at $10 per share. There is no established market for the preferred shares: ($ in millions) Cash 100 Common stock 4 (4 million shares x $1 par) Paid-in capital excess of par, common 36 – Preferred stock 40 (4 million shares x $10 par) Paid-in capital excess of par, preferred 20 –  If the total selling price is not equal to the sum of the two market prices, the total selling price is allocated between the two securities in proportion to their relative market values. T18-7
MORE THAN ONE SECURITY SOLD FOR A SINGLE  More than one security might be sold for a single price. The cash received usually is the sum of the separate market values of the two securities. Each is then recorded at its market value.  If only one security’s value is known, the second security’s market value is inferred from the total selling price. AP&P issues 4 million of its common shares, $1 par per share, and 4 million of its preferred shares, $10 par, for $100 million. Today’s issue of the Wall Street Journal lists AP&P’s common at $10 per share. There is no established market for the preferred shares: ($ in millions) Cash 100 Common stock (4 million shares x $1 par) 4 Paid-in capital – excess of par, common 36 Preferred stock (4 million shares x $10 par) 40 Paid-in capital – excess of par, preferred 20  If the total selling price is not equal to the sum of the two market prices, the total selling price is allocated between the two securities in proportion to their relative market values. T18-7
Ch18%20Shareholders%20Equity.docx