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.