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Equitylecture XX
Equitylecture XX
8. Shares Issued with other Securities (Ordinary shares and Preference shares)
a. Both FMV are given
b. only one of FMV given
9. Share Issue Costs and Stock Assessments (Transaction cost, e.g. registration and other
regulatory fees, amounts paid as legal and printing costs and stamp duties)- deduction from
equity(net of related tax benefit)
- Charge to Additional Paid in Capita (share premium) pertaining to that issue.
- if there is APIC or Share Premium pertaining to that issue, this will be recorded
as expense.
- Transactions costs that relate to bond issue with share warrants are allocated to
the liability (bonds) and equity components (share warrants outstanding)
10. Shares Reacquired and Retired
- If the retirement price exceeds the original issue price, such as the difference is
debited to the following accounts in the order given:
a. APIC from previous retirement or treasury share transactions of
the same class of stock; and
b. Retained earnings
11. Treasury Shares Reacquired (Cost Method, PFRS)
- Paid in capital from Treasury shares may be debited or credited for treasury
share transactions.
- Retained earnings may be debited but never credited for treasury share
transactions.
12. Donated treasury Shares
- No available Market price
- No available Market price
13. Share Split or Stock Split
- share split = 2 for 1 share split (received 2 shares for every 1 share surrendered)
- reverse share split = 1 for 2 share split ( received 1 share for every 2 shares
surrendered)
14. Retained Earnings (Accumulated Profits under IFRS)
Increase
- Current profit
- Adjustments for correction of prior period errors
- Cumulative effect of change in accounting policy
- Quasi-reorganization
- Revaluation surplus realized
Decrease
- Current loss
- Dividends
- Conversion of share capital
- Treasury share transactions
- Retirement of share capital
- Effects of recapitalization
- Adjustments for correction of prior period errors
- Cumulative effect of change in accounting policy
15. Dividends
Distribution of corporate income to its shareholders on a pro-rata basis.
16. Cash Dividends, Non Cash Assets (Property Dividends), Notes or Other Evidence of Corporate
Indebtedness (Scrip Dividends), and Corporation’s own share capital (stock dividends or bonus
issue)
Three Important Dates
a. Date of Declaration (record the dividends declaration)
b. Date of Record (determine who will be entitled to dividends, no journal entry)
c. Date of Payment or Distribution
Cash Dividends
Date of Declaration
Retained earnings xxx
Cash dividend payable xxx
Date of Payment
Cash Dividend payable xxx
Cash xxx
Property Dividends
Fixed Assets
Date of Declaration
Retained earnings xxx
Property dividends payable(FMV) xxx
Asset held for distribution (NBV) xxx
Accumulated depreciation xxx
Fixed assets xxx
Increase in market Value of Fixed Assets
Retained earnings xxx
Property dividends payable xxx
(Re-measurement at FMV)
Decrease in Market Value of Fixed Assets
Property dividends payable xxx
Retained earnings xxx
(Re-measurement at FMV)
Distribution of Fixed Assets
Property dividends payable xxx
Loss on disposal (Property dividends payable
is less than Assets held for distribution) xxx
Assets held for distribution xxx
Gain on disposal Property dividends
is greater than Assets held for
for distribution xxx