Vivencio B. Alvarez Jr.

BSA IV-A

Subscribed Share Capital

This is the portion of the share capital that an investor agreed to purchase. This portion
of capital stock is not yet issued because it may only be partially paid. This item is
added to the share capital.

Subscription Receivable

This refers to the unpaid portion of the subscription price. Under the Securities and
Exchange Commision of the United States of America (USA) and IFRS for SME,
subscriptions receivable must be netted against the Subscribed Share Capital.
However, under the old Statement of Financial Standards of the Philippines (SFAS), it is
presented as current assets if collectible currently, otherwise it is deducted from
subscribed share capital.

Retained Earnings or Accumulated Profits

This account is used to record the accumulated corporate periodic earnings since the
inception of the enterprise. It is decreased by any earnings distributed to stockholders in
the form of dividends, and adjusted by any prior year’s income adjustments or
fundamental errors and changes in accounting policies.

Unless stated otherwise, retained earnings as presented in the equity section of the
statement of financial position refer to the “free,” “unrestricted” or unappropriated”
retained earnings. This kind of retained earnings is basically available for distribution as
dividends to the stockholders.

Contributed Capital (also known as Paid In Capital)

This represents the amount invested or contributed by owners. This is composed of

share capital and share premium .