State three (3) of the main advantage they gain by selecting a corporate form of business now

Three main advantages Karen and Yanique may gain from forming a corporation are:

1) Personal asset/liability protection - A corporation provides more personal asset liability

protection to its owners. for example, if the corporation file bankruptcy, it's only the assets of
the corporation will be implicated not the personal assets of the shareholders/owners.
2) Business Security and continuation – The ownership of the corporation is based on the
percentage of stock ownership, which offers flexibility of transferring ownership and continuing
the business in the long run.
3) Access to sources of capital- Since most corporations sell ownership through public traded
stock, they can raise substantial amounts by selling shares. This is great not only for growing a
business, but also save a business from going bankrupt in times of need.

2. Would you recommend they initially issue preferred or common stock? Why?

Yes, I would recommend that Karen and Yanique initially issue common stock because
dividends generally must be paid on preferred stock.
3. If the corporation when formed sets a par value for its shares low and issue common stock
for a price above par, what is this amount above par called? Can this amount be treated as a
gain, income, or profit for the corporation? Please give the reason for your answer.

It is called stock at a Premium or excess at par this means that the corporation has collected
sale of Stock for an amount that exceeds the par value of that stock.
A share premium account is typically listed on a company’s balance sheet. This account is
credited for money paid, or promised to be paid, by a shareholder for a share, but only when
the shareholder pays more than the cost of a share therefore, they are owing or.