Accounting Assignment

ACCOUNTING
ASSIGNMENT
[DATE]
STUDENT NAME
University Name

Table of Contents
Solution to BYP 14-2................................................................................................... 2
Solution to P17-7A...................................................................................................... 3
References................................................................................................................. 6

Solution to BYP 14-2
a. The effect of cash dividend, stock dividend and stock split on PotashCorp’s
assets, equity and liabilities and on the number of shares outstanding is as
follows:
Effect of Impact
Cash dividend This would cause a decrease in the assets (cash balance)
and the shareholder’s equity (retained earnings
decreases), whereas there would be no impact on
liabilities as well as shares outstanding with the company.
Stock Dividend This would lead to increase in common stock for
shareholders and decrease in retained earnings thereby
no change in the overall shareholder’s equity. There
would be no impact on the assets and liabilities. The
number of shares outstanding would increase (Jefferson,
2017).
Stock Split This would have no impact on the assets, liabilities or
shareholder’s equity but the number of shares
outstanding would increase.
b. The company PotashCorp repurchased the shares over the past 2 years due
to several reasons mentioned below:
1. As per the company, the shares were undervalued and therefore it
repurchased its own shares in order to utilize the opportunity (Choy,
2018).
2. The company also justified its action mentioning that it was in the best
interest of the company.
3. The company also had excess cash reserves, which it wanted to utilize.
4. The company also wanted to boost the earning per share as it has
decreased in 2014 due to lower profitability.
Particulars 2014 2013
Profit for the year
1,536.
00
1,785.
00
No. of shares outstanding (at
year end) 830.20 856.10
Earnings per share 1.85 2.09