Use the following info for Questions 3 and 4 On June 6th, 2014 Apple Inc. declar
ID: 2561450 • Letter: U
Question
Use the following info for Questions 3 and 4 On June 6th, 2014 Apple Inc. declared a 7-for-1 stock split for the 861.38 million outstanding shares of its $0.00007 par common stock. What was an accounting effect? New shares outstanding-861.38 mln x7-6029.66 mln (about 6bln). The pie of shares was the same before and after split, but the company instead of 861 mln "slices" have 6bln "slices". From accounting standpoint, there was no need to do adjustment to Common Stock or Paid-in Capital. Thus, Total Equity after the split stayed the same Par value after the split 0.00001Calculated as follow: 0.0000717-0.00001 Reason for split: Apple stated that it executed this 7-for-1 stock split because it wanted to make its shares available to more investors Due to the split, the market price per share went from about $650 per share down to about $94 per share, making the stock affordable for more people Suppose, that your dearest grandma knowing your passion for technology instead of buying you another "toy" (New lead) bought you one Apple share as a Christmas present in 2013. So, as of December 25th, 2013 you became an Apple investor Apple 3. (0.5 point) On June 6th, 2014, you received a message from Apple, notifying you that you just become an owner of shares b. 2 C. 7 d. 49 4. (0.5 point) After the stock split you became an owner of a_part of the Apple company. (Put it differently, was your ownership stake diluted as.aresult of the stock split?) a. bigger b. smaller C. much smaller d. sameExplanation / Answer
3. You will become owner of 1 apple share only as grandma purchased one apple share.
4. After the stock split you become an owner of same part of the apple company. ownership stake will not be dilute as entioned in question itself that Pie of shares will remain same before and after stock split. stock split was just for availability of shares to more no of prospective shareholders.
Thus ans would be D