Competency 6 Communicate professionally according to the expectations of the field of accounting

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Dissolution

Introduction

For this assignment, you will consider the circumstances in which a corporation may be dissolved, either voluntarily or involuntarily.

By successfully completing this assignment, you will demonstrate your proficiency in the following course competencies and assignment criteria:

  • Competency 2: Recognize the various forms, requirements, and limitations of business organizations.
    • Explain the requirements to dissolve a corporation.
    • Determine, under applicable statute, whether a court is correct in ordering a dissolution.
  • Competency 6: Communicate professionally, according to the expectations of the field of accounting.
    • Express main points, arguments, concepts, and information coherently and logically.

Assignment Instructions

Analyze Business Case 41-5, “Dissolution,” located on page 814 of your textbook. Prepare a professional-caliber brief on the case.

41–5. Dissolution. Clara Mahaffey operated Mahaffey’s Auto Salvage, Inc., in Dayton, Ohio, as a sole proprietorship. In 1993, Kenneth Stumpff and Mahaffey’s son, Richard Harris, joined the firm. Stumpff ran the wrecker and bought the vehicles for salvage. Harris handled the day-to-day operations and the bookkeeping. They became the company’s equal 50 percent shareholders on Mahaffey’s death in 2002. Harris, who inherited the land on which the firm was located, increased the rent to $1,500 per month. Within two years of Mahaffey’s death, and without consulting Stumpff, Harris raised the rent to $2,500. Stumpff’s wife died, and he took a leave of absence, during which the company paid him $2,500 a month and provided health insurance. After two years, Harris stopped the payments, discontinued the health benefits, and fired Stumpff, threatening to call the police if he came on the premises. Stumpff withdrew $16,000 from the firm’s account, leaving a balance of $113. Harris offered to buy Stumpff’s interest in the business, but Stumpff refused and filed a suit in an Ohio state court against Harris. A state statute permits the dissolution of a corporation if the owners are deadlocked in its management. Should the court order the dissolution of Mahaffey’s? Why or why not? [Stumpff v. Harris, 2006 WL 2640232 (Ohio App. 2006)] (Clarkson 814)

Clarkson, Kenneth W. Business Law: Text and Cases, 13th Edition. Cengage Learning, 20140101. VitalBook file.

The citation provided is a guideline. Please check each citation for accuracy before use.

Based on the case information provided:

  • State the facts of the case and the key issues.
  • Cite the code or statute provisions applicable to the case.
  • Decide whether the court should order a dissolution of the corporation, and explain your reasoning.
  • Express your main points, arguments, concepts, and information coherently and logically.

To support your brief:

  • Explain the requirements to dissolve a corporation, and cite relevant law.

Additional Requirements

  • Cover page: Include your name, the assignment number, and the assignment or case title.
  • Length: 1–2 double-spaced pages, not including the cover page.
  • Font and font size: Times New Roman, 12-point.
  • APA formatting: Format resources and citations according to current APA guidelines.
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