ABC Corp. was incorporated on January 2, 2020. The following pertains to ABC's ordinary share transactions during the year.

 

Jan. 1 Number of shares authorized 80,000

Feb. 1 Number of shares issued 60,000

Jul. 1 Number of shares reacquired but not cancelled 5,000

Dec. 1 Two-for-one share split

 

What is the number of ABC Corp.'s ordinary share outstanding at December 31, 2020?Required to answer. Single choice.

 

(1 Point)

150,000

 

120,000

115,000

110,000

 

Ordinary share outstanding at December 31, 2020 = 110,000

Step-by-step explanation

Ordinary shares outstanding refer to shares that are currently held or owned by shareholders as at reporting date.

The formula to compute for ordinary share outstanding for ABC Corp. at December 31, 2020 is as follows:

Ordinary shares issued on Feb. 1 = 60,000

Less: Treasury shares reacquired on July 1 = 5,000

Outstanding shares at July 1 = 55,000

Multiply by: Share split on Dec. 1 = 2

Outstanding ordinary shares at December 31, 2020 = 110,000 shares

Treasury shares refer to shares previously issued but bought back or reacquired by the corporation from its shareholders. which decreases outstanding shares.

Share split increases the number of shares outstanding as the corporation splits one share into multiple number of shares.