Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

9Q

Expert-verified
Intermediate Accounting (Kieso)
Found in: Page 874

Short Answer

What are stock rights? How does the issuing company account for them?

Stock rights give a stockholder the choice of buying additional stock at a price below the current market price for a specified period. This type of issue gives existing shareholders securities called rights; the shareholders can purchase new shares at a discount to the market price on stated futures.

See the step by step solution

Step by Step Solution

Understanding the concept of Stock rights

Stock rights give their proprietor the right, however, not the commitment to purchase the portions of an organization at a particular exercise cost for an assigned period. The term fundamentally applies to giving current investors the option to purchase extra offers as a feature of the guarantor's next stock deal.

Issuing company accounts stock right

A right offering (rights issue) is a group of rights proposed to existing investors to buy extra stock offers, known as membership warrants, in relation to their current possessions. This is a choice since it gives an organization's investors the right, yet not the commitment, to buy extra offers in the organization.

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.