IDENTIFICATION

Authorized Share Capital

2 Stock Certificate
3 Watered share
4 Founders' share
5 Quasi-Reorganization
6 Appropriated retained earnings
7 Property dividends
8 Recapitalization
9 Legal capital
10 Revaluation

TRUE or FALSE
1 FALSE
2 TRUE
3 FALSE
4 TRUE
5 FALSE
6 TRUE
7 FALSE
8 TRUE
9 FALSE
10 TRUE

Problem 6
Cash pay out (800,000 x 65%)

Problem 7
Cash
Receivables
Inventory
Building, net
Total assets after quasi-reorganization

Problem 8
Deficit, beginning balance
Ar write-off
Inventory decline
Goodwill write-off
Total deficit
Revaluation surplus (10,500,000-5,600,000)
Deficit charge to share premium
Problem 1
Increase in share premium (80,000 x P30) - (80,000 x P15) 1,200,000

Problem 2
Preference share capital, P100 par 2,300,000
Ordinary share capital, P15 par 5,250,000
Subscribed ordinary share capital 500,000
Total legal capital 8,050,000

Problem 3
Preference Ordinary Total
Dividends in arrears 120,000 120,000
Current dividends 60,000 108,000 168,000
Participation (ratably) 224,800 337,200 562,000
404,800 445,200 850,000

Problem 4

Income from continuing operations 1,300,000

Income (loss) from discontinued operations (200,000)
Treasury shares (105,000)
Unrestricted retained earnings 995,000

Problem 5

Cash alternative (800,000 x 70%) 560,000

Property alternative (2,600,000 x 30%) 780,000
Decrease in RE July 1, 2017 1,340,000

Problem 6
Cash pay out (800,000 x 65%) 520,000

Problem 7
Cash 900,000
Receivables 3,000,000
Inventory 8,700,000
Building, net 10,500,000
Total assets after quasi-reorganization 23,100,000

Problem 8
Deficit, beginning balance (6,020,000)
Ar write-off (1,000,000)
Inventory decline (800,000)
Goodwill write-off (800,000)
Total deficit (8,620,000)
Revaluation surplus (10,500,000-5,600,000) 4,900,000
Deficit charge to share premium (3,720,000)
Problem 9

Property plant and equipment 3,000,000

Revaluation Surplus 3,000,000

Revaluation surplus 900,000

Retained earnings 900,000

2017 Retained earnings 0

Net Income 2,000,000
Dividends -500,000
Piecemeal recognition of Reval. Surp. (3M-900K)/3 700,000
2016 Retained earnings 2,200,000

Problem 10

Market Value Allocation of

Value Ratio Proceeds

Preference share P1,140,000 95% P1,187,500

Ordinary share warrants 60,000 5% 62,500
Total P1,200,000 P1,250,000

Problem 11

Subsciption price (100,000 x 25) 2,500,000

Downpayment (1,250,000)
First installment (625,000)
Unpaid balance 625,000
Direct cost of auction 10,000
Interest based on unpaid balance (625,000 x 12% x 3/12) 18,750
Offer price 653,750

Problem 12

Callable Pref. Share Capital 2,000,000

Callable Pref. Share Premium 1,000,000
Decrease in retained earnings 250,000
Call price 3,250,000

Problem 13

Revaluation surplus 4,000,000

Unrealized loss from FV OCI -1,500,000
Accumulated OCI 2,500,000
Problem 14

Decrease in appropriation for building 2,750,000

Increase in appropriation new plant (2,100,000)
Increase in unrestricted RE 650,000

Problem 15

ZERO - Memorandum only

Problem 16

Capital liquidated 2016 25,000,000

Capital liquidated 2017 30,000,000
Liquidating dividends 2017 5,000,000