Kirby subscribed to purchase 100 shares of stock to be issued by Globule, Inc., an already existing corporation. Globule accepte

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3 years ago

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Kirby subscribed to purchase 100 shares of stock to be issued by Globule, Inc., an already existing corporation. Globule accepte

d the subscription. The price set forth in the subscription agreement was $10 per share. The par value of the stock was $8 per share. When the time came for Kirby to pay the amount of his subscription, Kirby paid only $6 per share, claiming that such amount represented the fair value of the shares. Globule delivered the stock certificates to Kirby, but demanded the other $4 per share. Is Kirby liable for the other $4 per share

Business

1 answer:

creativ13 [48] · Answer 1 · 2022-05-18T08:32:05+03:00

Answer: C. No, but he is liable for another $2 per share.

Explanation:

A stock is not to be issued below its par value as this is the lowest price that it is to be issued at. If a par value is $4 for instance, the stock cannot be issued for anything less than this $4.

In this scenario, the par value is $8 per share which means that Globule Inc. cannot issue this share for less than $8. Kirby in paying only $6, is still liable for $2 so that he can at least pay for the stock at its par value.