Shareholders' Equity
Auctioned subscription
"Highest bidder" willing to pay offer price willing to receive smallest number of share
Share Premium (Reserve)
ADDITIONAL PAID IN CAPITAL Paid in capital in EXCESS of the par value or stated value. Other premiums in relation to the retirement of STOCKS.
Dr. Treasure Shares Cr. Subscriptions Receivable, Receivable from highest bidder
Acquisition of entity's own shares NO HIGHEST BIDDER
Current assets
Advances on stock delinquency sale shall be treated as _________ if the statement of financial position is prepared BEFORE the paymentnof the highest bidder.
Profit or Loss
Any difference between CA of the Fin Liab extinguished and the measurement of the measurement of the Equity Instruments shall be recognized in ________________________.
Treasury Shares
Are company's own stock previously issued, reacquired but not cancelled.
Stock Right
Granted to existing shareholders to enable them to acquire new shares @ a specified price during a specified period
Unrestricted RE
If SILENT Basically available gor distribution as dividends tonthe stockholders
Delinquent Subscription
If a stock subscriber dows not pay in full his unpaid stock subscription on the fixed by the BOD
Share Premium
If the warrants are not exercised the ordinary share warrants outstanding account is simply transferred to _____________________
Cost Method for Treasury shares
In the Philippines, the standard require TREASURY SHARES to be accounte exclusively under the
Reserves
Includes stockholder's equity OTHER THAN the total par or stated value of the capital stock and the unrestricted retained earnings.
Revaluation (Reserve)
Increase of the recorded amount in tge value of plant assets Appraisal in relation to their replacement cost
Watered Share
Issued at a discount or inadequate or insufficient consideration / less par value DEDUCTION TO SHE
ISSUANCE OF TWO OR MORE CLASSES
Issued simultaneously at a basket or lumpsum a. if the shares have fair value - PROPORTIONAL METHOD b. if only one of them has an available fair value - INCREMENTAL METHOD
No entry
Journal entry in ISSUANCE OF WARRANTS
Dr. Cash Cr. Share Capital, Share Premium
Journal entry to record EXERCISE OF WARRANTS
No entry
Journal entry to record EXPIRATION OF WARRANTS
Cost of Public Offering of Shares
No Issuance - Expensed in P&L when incurted S tock Exchange Listing Fees P ublic relations consultant fee R oadshow presentation
Share Split
No effect on the amount of share capital. There is only a change in number of shares and the par value or stated value. NO FORMAL ENTRY NECESSARY
Debt for equity swap
ORDER OF PRIORITY FOR LIABILITY EXTINGUISHED CONSIDERATION SHARE CAPITAL IS EQUAL TO FV share capital issued FV liability extinguished CA of the liability extinguished
Non cash asset or service
ORDER OF PRIORITY FOR NON CASH ASSET OR SERVICE CONSIDERATION SHARE CAPITAL IS EQUAL TO FV of noncash consideration RECEIVED FV of share capital ISSUED PAR Value of share capital ISSUED
Recapitalization
Occurs when the is a change in the capital structure of the company. The old shares are cancelled and new shares are issued.
Share Premium
Ordinary share warrants outstanding shall be reported as part of __________________
Perceived Gain
Original Issue Price is GREATER than the Reacquisition Price / Cost of TS
Perceived Loss
Original Issue Price is LESSER than the Reacquisition Price / Cost of TS
Contributed Capital
PAID IN CAPITAL Amount invested or contributed by owners COMPOSED with Share Capital Share Premium
Legal Capital
Portion of PAID IN CAPITAL / CONTRIBUTED CAPITAL which cannot be returned to stockholders in any form during the LIFETIME of the Corporation
True
T/F According to the law, the approval of incorporation requires that at least 25% of the authorized capital stock should have been subscribed and 25% of which should have been paid.
True
T/F Legal Capital of a capital stock WITH PAR VALUE is the aggregate ampunt at par value of the shares issued and subscribed.
False Received OTHER than shareholders are credited to APPROPRIATE INCOME ACCOUNT
T/F Donations received from parties other than shareholders are credited in the Donate Capital account.
True
T/F No issuance of shares will be made for forefeited downpayment
Par Value Method of Treasury Shares
The amount debited to treasury shares is EQUAL to total PAR VALUE of the Treasury Shares. SHARE PREMIUM from the original issuance is also DEBITED Subsequent reissuance and retirement of the treasury shares is also CREDITED at PAR
Entire Consideration Received
The legal capital of a capital stock without PAR VALUE is the __________________
Subscriptions receivable
Unpaid portion of the subscription price. MUST BE NETTED AGAINST SUBSCRIPTION SHARE CAPITAL
Donated Capital
What account is credited if donations is received from shareholders.
Share Warrants
Certificates that entitle the holder thereof to acquire shares at a certain price within a specified period.
Indirect Costs
Charged expense in the period incurred. M anagement salaries O ther expensed outright R egistrar agent fees
Debit
Debit / Credit In issuance of share capital, the Discount on Share Capital is?
Credit
Debit / Credit In issuance of share capital, the Premium on Share Capital is?
Share Issuance Cost
Deducted from share premium D ocumentary stamp O ther percentage tax N ewspaper publication fees U nderwriting S EC Registration Fees P rinting certificate C PA Fees
Treasury shares
Deducted in getting the TOTAL SHE
Dr. Treasure Shares, Share Premium - Original Issuance, Retained Earnings Cr. Cash, Share Premoum - TS
Entry gor acquisition of own shares using PAR VALUE METHOD
Dr. Treasury Shares Cr. Cash
Entry to record acquisition of entity's own shares
Dr. Cash Cr. Subscriptions Receivable
Entry to record cash collection (downpayment)
Dr. Cash Cr. Subscriptions Receivable, Receivable from Highest Bidder, Interest Income
Entry to record collection from highest bidder
Dr. Subscribed Share Capital Cr. Share Capital
Entry to record issuance of share certificates
Dr. Cash Cr. Treasury Shares, Share Premium - TS
Entry to record reissuance of treasury @ ABOVE PAR
Dr. Cash, Share Premium - TS, Retained Earnings Cr. Treasury Shares
Entry to record reissuance of treasury @ BELOW PAR
Dr. Cash Cr. Treasury Shares, Share Premium Treasury Shares
Entry to record reissuance of treasury shares @ above cost
Dr. Cash, Share Premium-TS, Retained Earnings Cr. Treasury Shares
Entry to record reissuance of treasury shares @ below cost
Dr. Cash Cr. Treasury Shares
Entry to record reissuance of treasury shares @ cost
Dr. Share Capital, Share Premium - Original Issuance Cr. Treasury Shares, Share Premium-TS
Entry to record retirement @ a PERCEIVED GAIN
Dr. Share Capital, Share Premium - Original Issuance, Share Premium - TS, Retained Earnings Cr. Treasury Shares
Entry to record retirement @ a PERCEIVED LOSS
Dr. Share Capital Cr. Treasury Shares
Entry to record retirement of treasury shares
Dr. Subscriptions Receivable Cr. Subscribed Share Capital
Entry to record subscriptions share capital
Organization Costs
Except SHARE ISSUANCE COSTS Expensed in the first year
Net changes (Reserve)
FOREIGN CURRENCY TRANSLATION RESERVE - Gains or losses on foreign currency translation EQUITY ADJUNCT / CONTRA RESERVE - Tempotary increases or decreases of NONCURRENT SECUTIRIES as a result of MARKET FLUCTUATION. E.G., Unrealized gains or losses on FV through OCI Investments
Entry expenses related to AUCTION
Receivable from highest bidder Cash
Retained Earnings of Accumulated Profits
Record accumulated corporate periodic earnings since the inception of the enterprise. DECREASED BY any earnings distributed to stockholders (dividends) ADJUSTED by any prior year's incom adjustments / fundamental errors and changes in accounting policies.
Dr. Subscribed Share Capital, Share Premium - Original Subscription, Cr. Subscription Receivable, Receivable from highest bidder, Share Premium - Delinquent Subscription
Record the acquisition of shares with no HIGHEST BIDDER AND THE CORPORATION IS PROHIBITEDNTO ACQUIRE THE SHARES
Share capital
Represnting the amount of the total par or stated value of the shares issued.
Retained earnings (Reserve)
Restricted portion of the RE APPROPRIATED RETAINED EARNINGS Examples: RE Appropriated for Plant Expansion, Contingencies, Treasury Stock, Bond or Preference Share Redemption
Entry for Forfeited downpayment
SSC PREMIUM ON SC S/R SP - Forfeited DP SP - Forfeited DP = amount paid by the delinquent subscriber
Order of Priority Share Issuance Cost
Share Premium Retained Earning (if no share premium from issuance or if share premium issuance is not sufficient)
True
T/F Regardless whether there is a perceived gain or loss, SHARE PREMIUM FROM ORIGINAL ISSUANCE is DERECOGNIZED
False The premium / excess over par is NOT considered as part of the LEGAL CAPITAL
T/F The premium / excess over par is considered part of the legal capital.
True
T/F Transaction costs that are directly attributable to the issuance of shares shall be deducted from equity, net of any tax benefit.
True
T/F Under the corporation code, preference shares should always be issued with par value
True
T/F When the shares issued have no fair value, use the proportional method and allocate the lump sum price based on the PAR VALUE of shares issued.
I- True, II - True
T/F With highest bidder the recipient of shares will be the I. T the highest bidder - # of shares willing to receive II. Delinquent subscriber - any remaining shares
False A corporation cannot issue it's capital stock if not fully paid.
T/F A corporation can issue it's capiral stock if not fully paid.
Subscribed share capital
The share capital that an investor agreed to purchase. This portion of capital stock is not yet issued because it is partially paid. ADDED TO SHARE CAPITAL
Cost Method of Treasury Shares
Treasury shares are debited or recognized at ACQUISITION COST. Any subsequent reissuance and/or retirement of the treasury shares is credited at the cost
Treasury Share
When there is no bidders forthe auction sale of the delinquent shares the corporation may purchase for itself its delinquent shares resulting to a _________________ transaction.
Subscriptions
Written contract by which one engages to take and pay for the capital stock of a corporation in some FUTURE DATE.