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What is the amount of the deemed dividend to Mr Blue

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Question - Blueberry Inc. has 50,000 shares of common stock outstanding which were issued for total proceeds of $450,000. On November 30, 2019, a creditor holding debt with a carrying value of $100,000 agrees to take 10,000 newly issued common shares in order to settle the debt obligation. At the time of this exchange, the shares are trading for $11.25 per share. Mr. Blue owns 2,000 shares in Blueberry Inc, which he purchased on the market for $10 on January 15, 2019. Required: What is the amount of the deemed dividend to Mr. Blue? Show the calculations of (a) the deemed dividend per share and (b) the deemed dividend amount for Mr. Blue's holding.

Reference no: EM132611785

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