Question

In 20X3, Snowboard Ltd. had the following share capital outstanding: Preferred shares, no-par value; $1.90 dividend: authorized, unlimited shares; issued, 100,000 shares Common shares, no-par value; authorized, unlimited shares; issued, 760,000 shares $1,400,000 1,064,000 No dividends were declared in 20X1 or 20x2, but $1,990,000 of dividends were declared in 20X3. Required: Calculate the amount of dividends that would be paid in 20x3 to each share class under the following separate cases: Case A Preferred shares are cumulative and non-participating. Total Paid Preferred Common Year 20x3 allocation: Arrears Current Remainder Total Case B Preferred shares are cumulative and participating with common shares after the common shares receive a $1 per share dividend. Participation is based on relative annual total base dividends. Total Paid Preferred Common Year 20x3 allocation: Arrears Current Matching Remainder

Answer 1

1990000 570000 1420000 1 Case A: 2 Dividend declared in 20x3 3 Dividend for preferred shares (for 3 years) 4. Dividends for common shares 5 6 Case B: 7 Dividends declared in 20x3 8 2 years dividend on preferred stock 9 Total number of shares 10 Remaining dividend 11 Rate of participation 12 1990000 380000 860000 1610000 1.87 13 Preferred 14 Dividends 15 Common 567209.3023 567209 1422790.698) 1422791 Rounded amount

Α. B 1 Case A: 2 Dividend declared in 20x3 1990000 3 Dividend for preferred shares (for 3 years) =1.9*100000*3 4. Dividends for common shares =B2-B3 5 6 Case B: 7 Dividends declared in 20X3 1990000 8 2 years dividend on preferred stock =1.9*100000*2 9 Total number of shares =100000+760000 10 Remaining dividend =B7-B8 11 Rate of participation =B10/B9 12 13 14 Dividends 15 Preferred Common =B8+(100000*B11) I=760000*B11 Rounded amount 567209 1422791