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Opentution question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › Opentution question

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 18, 2023 at 7:43 pm #690195
    whydoyoucare
    Participant
    • Topics: 50
    • Replies: 46
    • ☆☆

    Evdokia has been employed by Theodoros Ltd for over 20 years and during that time she has invested in the company in the form of shares and debentures. Evdokia’s holdings are 5,000 $1 equity shares, 80 cents paid and $8,000 3% debentures secured by a fixed charge over the factory and the land upon which Theodoros Ltd factory is built
    At the beginning of February this year the directors announced that Theodoros Ltd was going into an immediate insolvent liquidation owing considerable amounts of money to trade creditors. As a result of the suddenness of the decision to liquidate the company none of the employees received their salary for January
    b) With reference to her holding of equity shares, which TWO of the following statements are true (2 marks):

    A Evdokia will be required to pay in the uncalled amount of $1,000 only if there is an insolvent situation
    B equity shareholders are paid only their nominal value before any payments are made to the unsecured creditors. Any surplus remaining after paying the liabilities in full is then shared amongst the equity shareholders
    C only in the event that ALL creditors and preference share holders have been paid in full will the equity shareholders participate in any funds remaining
    D Evdokia will be required by the liquidator to pay the uncalled share capital related to her holding of equity shares

    Your AI says A and C are correct. Your test answers say C and D are. I would like to believe the former, however I want you to please confirm

    August 18, 2023 at 8:52 pm #690208
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Option C is clearly correct.

    I imagine that option A is a practical matter – why would the liquidator of a solvent company require the holders of partly paid shares to pay up the so-far-uncalled amounts on their shares.

    When I wrote the question, I wonder whether I had in mind the slightly amended wording for option D ‘Evdokia MAY be required by the …’

    But then that would also be true.

    It seems that I (like BPP and other approved publishers) too am capable of errors.

    Sorry about that one!

    August 18, 2023 at 10:39 pm #690214
    whydoyoucare
    Participant
    • Topics: 50
    • Replies: 46
    • ☆☆

    It’s ok Mike thankyou!

    August 19, 2023 at 8:27 am #690235
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    You’re welcome

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    Posts
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