STOCKHOLDERS ‘ EQUITY

27 November 2018
TERMS USED BY CORPORATION IAS AND IFRS TERMS
CODE
CAPITAL STOCK SHARE CAPITAL

SUBSCRIBED CAPITAL STOCK SUBSCRIBED SHARE CAPITAL

COMMON SHARE ORDINARY SHARE

PREFERRED SHARE PREFERENCE SHARE

ADDITIONAL PAID IN CAPITAL SHARE PREMIUM

RETAINED ERANINGS ACCUMULATED PROFITS

REVALUATION SURPLUS REVALUARION SURPLUS

TREASURY STOCK TREASURY SHARE

STOCKHOLDERS’ EQUITY
-IS THE RESIDUAL INTEREST OF OWNERS IN THE NEST ASSETS OF A
CORPORATION MEASURED BY EXCESS OF ASSETS OVER LAIBILITIES

COMPONENTS OF SHE:

SHARE CAPITAL ISSUED 100,000.00

SUBSCRIBED SHARE CAPITAL 300,000.00
LESS: SUBSCRIPTION RECEIVABLE 34,000.00 266,000.00
SHARE PREMIUM
SHARE PREMIUM IN EXCESS OVER PAR 2,000.00
SHARE PREMIUM - TREASURY SHARES 43,000.00
DONATED CAPITAL 54,000.00 99,000.00
TOTAL PAID IN CAPITAL 365,000.00
RETAINED EARNINGS - UNAPPROPRIATED 900,000.00
RETAINED EARNINGS - APPROPRIATED 230,000.00 1,130,000.00
TOTAL 1,495,000.00
LESS: TREASURY SHARES 90,000.00
TOTAL SHARHOLDERS' EQUITY 1,405,000.00
SHARE CAPITAL
- PAID-IN CAPITAL REPRESENTING THE AMOUNT OF
THE TOTAL PAR OR STATED VALUE. IT REPRESENTS
THE AUTHORIZED CAPITAL SROCK THAT HAS BEEN
FULLY PAID.

TWO CLASSES OF SHARE CAPITAL

1. ORDINARY SHARE CAPITAL

2. PREFERENCE SHARE CAPITAL
JOURNAL ENTRIES:
MEMORANDUM ENTRY
AUTHORIZATION OF SHARES
- MEMO ENTRY IN GL
SUBSCRIPTION
Dr. Subscription Receivable
Cr. Subscribed Share Capital
ISSUANCE OF CERTIFICATE
Dr. Subscribed Share Capital
Cr. Share Capital
RECACQUISITION
Dr. Treasury Share
Cr. Cash or any other account
RETIREMENT OF TREASURY STOCK
Dr. Share Capital
Cr. Treasury Share
JOURNAL ENTRY METHOD
Dr. Unissued share capital
Cr. Authorized share capital
Dr. Subscription Receivable
Cr. Subscribed Share Capital
Dr. Subscribed Share Capital
Cr. Unissued share Capital
Dr. Treasury Share
Cr. Cash or any other account
Dr. Unissued Share Capital
Cr. Treasury Share
 LEGAL CAPITAL
- PORTION OF PAID IN CAPITAL OR CONTRIBUTED CAPITAL THAT CANNOT BE RETURNED TO
STOCKHOLDERS IN ANY FORM (CASH, PROPERTY OR STOCK DIVIDENDS)

- FORMULA:
- A. WITH PAR VALUE SHARE CAPITAL + SUBSCRIBED SHARE CAPITAL
- B. NO PAR VALUE SHARE CAPITAL + SUBSCRIBED SHARE CAPITAL + SHARE PREMIUM
The accounts below appear in Dec 31, 2017 TB of Prescreet Company

AUTHORIZED ORDINARY SHARE 3,500,000.00

UNISSUED ORDINARY SHARE 1,000,000.00
SUBSCRIBED ORDINARY SHARE 500,000.00
SUBSCRIPTION RECEIVABLE 600,000.00
PREMIUM ON ORDINARY SHARE 200,000.00
RETAINED EARNINGS - UNAPPROPRIATED 500,000.00
RETAINED EARNINGS -APPROPRIATED 220,000.00
REVALUATION SURPLUS 400,000.00
TREASURY SHARES 220,000.00

COMPUTE FOR:
1. SUBSCRIBED ORDINARY SHARE
2. PAID-IN CAPITAL OR CONTRIBUTED CAPITAL
3. LEGAL CAPITAL
4. TOTAL SHE
ISSUANCE OF SHARE CAPITAL:
1.CASH
2. NON-CASH CONSIDERATION
3. EXISTING LIABILITY
4. DELIQUENT SUBSCRIPTION
 ISSUANCE OF SHARE CAPITAL: CASH
ENTRY:
Dr. Cash XXX
Discount on share capital XXX
Cr. Share Capital (at par value) XXXX
Premium on share capital or APIC XXXXXX

*WATERED SHARE
- SHARE ISSUED AT A DISCOUNT
- DEDUCTED TO TOTAL SHE
ISSUANCE OF SHARE CAPITAL: CASH
Assume the following issuances of P100 par
value share of stock:
1. Issuance of 3,000 shares at par for cash.
2. Issuance of 5,000 shares at P110 for
cash.
3. Issuance of 4,000 shares at 90 for cash.
ISSUANCEOF SHARE CAPITAL: NON-CASH
CONSIDERATION

INORDER OF PRIORITY
FV OF NON CASH CONSIDERATION
RECEIVED
FV OF SHARE CAPITAL ISSUED
PAR VALUE OF SHARE CAPITAL ISSUED
 ISSUANCE OF SHARE CAPITAL: NON-CASH
 Assume the following issuances of a P100 par value
share of stock:
1. Issued 2,500 shares of stock for machinery. The
machinery has a fair value of P280,000 while the
stock is selling for P105/share
2. Issued 1,000 shares of stock for patent. The
stock is selling for P105/share.
3. Issued 500 shares in full payment of organization
services rendered from the legal counsel. FV of
service is P60,000.00
ISSUANCE OF SHARE CAPITAL: EXISTING
LIABILITY
IN ORDER OF PRIORITY
FV OF SHARE CAPITAL ISSUED
FV OF LIABILITY EXTINGUISHED
CARRYING AMOUNT OF LIABILITY
EXTINGUISHED
COMPUTATION ON LOSS OF
EXTINGUISHMENT OF LIAB

FV OF EQUITY ISSUED OR FV OF LIAB

LESS: CARRYING AMOUNT OF LIAB
LOSS OR (GAIN) ON EXTINGUISHMENT OF
LIABLITY
THE COMPANY ISSUED 2,000, P100 PER
ORDINARY SHARES FOR AN OUTSTANDING
BANK LOAN OF P250,000. ON THIS DATE
SHARES ARE QUOTED AT P140 PER SHARE.

PREPARE ALL JOURNAL ENTRIES.

 ISSUANCE OF SHARE CAPITAL: TWO OR MORE
CLASSES

 The Company issued the following shares of

stock:
 1. Issued 5,000, P200 par value preference
share for P220 per share for cash
 2. Issued 1,000 P100 par value ordinary share
for P120 share for cash
 ISSUANCE OF SHARE CAPITAL: TWO OR MORE CLASSES

 The Company issued the following shares of stock and

received total consideration of P1,000,000
 1. Issued 5,000, P200 par value preference share for
P220 per share for cash
 2. Issued 1,000 P100 par value ordinary share for P120
share for cash

Allocate the consideration received and prepare all

necessary journal entries
DELIQUENT (FORFEITED SUBSCRIPTION)
IF THE STOCKHOLDER DOES NOT PAY IN
FULL HIS UNPAID STOCK SUBSCRIPTION ON
THE DATE FIXED BY BOD, HE MAY BE
DECLARED AS DELIQUENT SUBSCRIBER
FORFEITED DOWNPAYMENT
Dr. SUBSCRIBED SHARE CAPITAL
 PREMIUM ON SHARE CAPITAL
CR.SUBSCRIPTION RECEIVABLE
 SHARE PREMIUM – FORFEITED
DOWNPAYMENT
 The following transactions pertain to one of
the subscribers of Edward Co.
 X Subscribed 10,000, P100 par ordinary shares
at P110
 X paid 40% of the subscription price
 Subsequently X was declared as delinquent.
Down payment is forfeited.

 PREPARE ALL JOURNAL ENTRIES

 WITH HIGHEST BIDDER

 To record expenses incurred related to bidding

 Dr. Advances from sale of delinquency share or receivable from highest bidder
Cr. Cash

 To record collection from highest bidder

 Dr. Cash
Cr. Subscription Receivable

 To record issuance of share

 Dr. Subscribed Share Capital
Cr. Share capital
Mikee Cloudette Corporation declared Rex Stock subscription delinquent.
The records of subscribed share capital pertinent to Rex shows a 5,000
shares at P100 par of which the remaining unpaid subscription balance is
P280,000. The delinquent stocks are subsequently offered for public
auction incurring a cost of P20,000. The offer price is P300,000.

The three bidders during the auction who are willing to pay the offer price
corresponding to shares of stocks as follows:

Bidders # of shares willing to be received

Zeus 3,000 shares
Andriz 3,500 shares
Rhad Vic 4,000 shares

Determine the following:

1. Highest bidder
2. Number of shares Rex should received
3. Prepare all necessary journal entries