This action might not be possible to undo. Are you sure you want to continue?
“An artificial being created by operation of law, having the right of succession and powers, attributes and properties expressly authorized by law or incident to its existence” (New Corporation Code) CHARACTERISTICS: 1. Separate legal entity – artificial being 2. Created by operation of law 3. Right of succession 4. Powers, attributes, properties authorized by law 5. Ownership divided into shares 6. Management is vested in a Board of Directors
ADVANTAGES: 1. capacity to act as a legal entity 2. large scale of business undertaking 3. unlimited life 4. limited liability of stockholders for corporate debts 5. shares can be transferred without the prior consent of other stockholders 6. centralized management under Board of Directors DISADVANTAGES 1. not easy to form because of complicated legal requirements 2. activities limited by the articles of incorporation 3. subject to rigid government control 4. possibility of abuse of powers. 5. restricts active participation by stockholders CLASSES OF CORPORATION
Private Corporation-organized for private benefit. 4. 8.capital comes from fees paid by individuals composing it.private corporation performing public functions. Incorporators – persons who originally formed the corporation. Corporators – persons who compose the corporation. 4. 3. Closely-held Corporation -50% or more of its stock is owned by 5 or less. Promoters – persons who undertake the formation of a company. Quasi-public Corporation. PROCESS OF ORGANIZING A CORPORATION: . 9. Stockholders – corporators of stock corporation. 2.ownership is widely held by many investors. 5. set it going and take necessary steps to accomplish its purpose. (stockholders or members) 3. 6. unissued shares but will pay at later date. 2. Members– corporators of non-stock corporation. COMPONENTS 1. Stock Corporation -capital is divided into shares of stock. 7. Open Corporation. public. aim or end 5. Non-stock Corporation. Public Corporation-organized to govern a portion of the state. Foreign Corporation-organized under the laws of other countries.1. Subscribers – persons who agreed to take original. Underwriters – in charge of disposing the shares of stock to the gen. 6. Domestic Corporation -organized under Philippine laws 7.
BASIC RIGHTS OF SHAREHOLDERS 1. vouchers and other supporting documents. Stock and transfer book – stockholders’ journal. ledger and subscribers’ ledger. CORPORATE RECORDS: 1. . to share in the distribution of assets upon corporate liquidation. to vote in stockholders’ meeting. to share in the distribution of corporate profit. 3. PRE-INCORPORATION REQUIREMENTS 1. pre-emptive right. 3.1.to maintain one’s ownership in the corporation by buying additional shares. Commencement of the business – should start within 2 years from date of incorporation. Record of all business transactions – journals. Articles of Incorporation – enumerates the powers and restrictions conferred upon the corporation by the government. ledgers. By-Laws – contains provisions for internal administration of the corporation. Incorporation – the process of formalizing the organization of the corporation. DOCUMENTS FILED WITH SEC: 1. 2. Promotion – set up tentative working organization to solicit subscriptions to raise sufficient capital. 2. Minutes of all meeting of directors and stockholders. 2. 25% OF THE AUTHORIZED CAPITAL STOCK MUST BE SUBSCRIBED. 2. 3. 4.
000 X 25% P250. Authorization of share capital Memorandum Entry Journal Entry Method Method Authorized to issue xxx Unissued Share Capital shares at P100 par value Authorized Share Capital 2. 25% OF THE SUBSCRIPTION MUST BE PAID.2.000 shares of share capital at P100 par value.500 ACCOUNTING FOR SHARE CAPITAL AT PAR 1.000 X 25% P62. Collection of Subscription Memorandum Entry Journal Entry Method Method Cash Cash . Example The corporation was authorized the issue 100. Subscription of share capital Memorandum Entry Method Subscription Receivable xx Subscribed Share Capital xx Journal Entry Method Subscription Receivable xx Subscribed Share Capital xx 3. 1) 1.000.000 2) 250.
Issuance in Exchange for Non-cash assets (at par) Memorandum Entry Method Land (FMV) Share Capital xx Journal Entry Method xx Land (FMV) xx Unissued Share Capital xx ACCOUNTING FOR SHARE CAPITAL ABOVE PAR . Issuance for cash (at par) Memorandum Entry Method Cash Share Capital xx Journal Entry Method xx Cash xx Unissued Share Capital xx 6. Issuance of Stock Certificate (upon full payment) Memorandum Entry Journal Entry Method Method Subscribed Share Capital Subscribed Share Capital xx xx Share Capital Unissued Share xx Capital xx 5.xx Subscription Receivable xx xx Subscription Receivable xx 4.
Subscription of share capital Memorandum Entry Method Subscription Receivable xx Subscribed Share Capital (at par) xx Share Premium xx 3. Authorization of share capital Memorandum Entry Journal Entry Method Method Authorized to issue xxx Unissued Share Capital shares at P100 par value Authorized Share Capital 2. Collection of Subscription Memorandum Entry Method Cash xx Subscription Receivable xx 4.1. Issuance for cash Memorandum Entry Method Cash xx Journal Entry Method Cash Journal Entry Method Subscription Receivable xx Subscribed Share Capital (at par) xx Share Premium xx Journal Entry Method Cash xx Subscription Receivable xx (upon full payment) Journal Entry Method Subscribed Share Capital xx Unissued Share Capital xx . Issuance of Stock Certificate Memorandum Entry Method Subscribed Share Capital xx Share Capital xx 5.
xx xx Share Capital (at par) Share Premium xx Unissued Share Capital (at par) xx Share Premium xx 6. Issuance in Exchange for Non-cash assets (at par) Cash xx Cash Share Capital (at par) xx xx Unissued Share Share Premium Capital (at par) xx xx Share Premium xx CORPORATION ACCOUNTING TERMINOLOGIES OLD TERMINOLGIES UNISSUED CAPITAL STOCK AUTHORIZED CAPITAL STOCK CAPITAL STOCK SUBSCRIPTION RECEIVABLE ADDITIONAL PAID IN CAPITAL UNISSUED COMMON STOCK AUTHORIZED COMMON STOCK COMMON STOCK ADDITIONAL PAID IN CAPITAL-COMMON STOCK SUBCRIPTION RECEIVABLE-COMMON STOCK SUBSCRIBED COMMON STOCK UNISSUED PREFERRED STOCK AUTHORIZED PREFERRED STOCK COMMON STOCK ADDITIONAL PAID IN CAPITALPREFERRED STOCK SUBCRIPTION RECEIVABLE-PREFERRED NEW TERMINOLGIES UNISSUED SHARE CAPITAL AUTHORIZED SHARE CAPITAL SHARE CAPITAL SUBSCRIPTION RECEIVABLE SHARE PREMIUM UNISSUED ORDINARY SHARE CAPITAL AUTHORIZED ORDINARY SHARE CAPITAL ORDINARY SHARE CAPITAL ORDINARY SHARE PREMIUM SUBCRIPTION RECEIVABLE-ORDINARY SHARE SUBSCRIBED ORDINARY SHARE CAPITAL UNISSUED PREFERENCE SHARE CAPITAL AUTHORIZED PREFERE CE SHARE CAPITAL PREFERENCE SHARE CAPITAL PREFERENCE SHARE PREMIUM SUBCRIPTION RECEIVABLE- .
000 subscribed to 500 Subscribed Share shares each at par Capital To record subscription.000 par. Share Capital Issued 1. 6.000 shares at formation of the par.000 9. Attorney’s fees and 6 Pre-Operating Expense 7. full CR 25.000 share capital at 10. Collected 50% of the Cash 9. The 5 incorporators 5 Subscription Receivable 25.000 6250 7.000 share capital P10 par value with P10 par value 2. Collected the 1 Cash 9. 3.PREFERRED STOCK PREFERENCE SHARE SUBSCRIBED PREFERENCE SHARE CAPITAL ORDINARY SHARE CAPITAL IN EXCESS OF STATED VALUE PREFERENCE SHARE CAPITAL IN EXCESS OF STATED VALUE SAMPLE TRANSACTIONS: TRANSACTIONS MEMO ENTRY METHOD DR ISSUANCE OF STOCKS AT PAR VALUE 1. Receivable To record 25% payment. P5.000 shares at par. ABC Corporation was Ja 5 Authorized to issued authorized to issue n 10.000 shares at 7 Cash 10.000 exchange for office Share Capital equipment worth Issued 500 shares at par.375 subscription balance of 0 Subscription the incorporators in full Receivable and issued stock To record collection in certificates.000 10.000 9. 7.COMMON STOCK ADDITIONAL PAID IN CAPITAL IN EXCESS OF STATED VALUE. Sold 1. The incorporators 5 Cash 6250 paid 25% of their Subscription subscription. Receivable To record collection.000 other expenses Share Capital incurred in the Issued 1.000 8.375 . 4. 5. corporation totaled P7.375 incorporators’ Subscription subscription balance. Issued 500 shares in 9 Office Equipment 5.STOCK SUBSCRIBED PREFERRED STOCK ADDITIONAL PAID IN CAPITAL IN EXCESS OF STATED VALUE.375 5. Issued 700 shares.000.
000 9.000 shares at corporation totaled par. Receivable To record 25% payment.000 10.000 Subscribed Share shares at P12 per Capital share.000 authorized to issue n Authorized Share 10.000.000 5.000 shares at par. Unissued Share Capital Issued 1.000 1 Cash 15. 2. Issued 700 shares. 5.000 shares at P15 per 5 Share Capital share Share Premium Issued 1.000 2.000 10.000 subscribed to 500 Subscribed Share shares each at par Capital To record subscription. Receivable CR 100.000 subscriptions for 1.000 share capital Capital with P10 par value To record authorized capital stock. 4. Received Subscription Receivable 12. P7. Attorney’s fees and 6 Pre-Operating Expense 7. The 5 incorporators 5 Subscription Receivable 25.000 par.000 10. Sold 1. Issued 1. 6.Subscribed Share 25.000 Capital Share Capital Issued stock certificate.375 incorporators’ Subscription subscription balance. 3.000 6250 7. ABC Corporation was Ja 5 Unissued Share Capital 100.000 shares at par. 1 0 25.000 other expenses Unissued Share incurred in the Capital formation of the Issued 1.000 TRANSACTIONS JOURNAL ENTRY METHOD DR ISSUANCE OF STOCKS at PAR VALUE 1.000 shares at 7 Cash 10. Share Premium To record subscription.000 25. Collected 50% of the Cash 9.375 . 10. The incorporators 5 Cash 6250 paid 25% of their Subscription subscription. ISSUANCE OF STOCKS ABOVE PAR VALUE 9.
000 1 Cash 15.000 Issued 500 shares at par.375 25.000 Subscribed Share shares at P12 per Capital share.000 subscriptions for 1. Share Premium To record subscription. 10. ISSUANCE OF STOCKS ABOVE PAR VALUE 9.000 shares at par.000 2.375 subscription balance of 0 Subscription the incorporators in full Receivable and issued stock To record collection in certificates.000 exchange for office Unissued Share equipment worth Capital P5. 8. Issued 500 shares in 9 Office Equipment 5. full 1 Subscribed Share Capital 25. Collected the 1 Cash 9.000 10. Issued 1.000 .000 9. 7.To record collection. Received Subscription Receivable 12.000 10.000 5. 5.000 shares at P15 per 5 Unissued Share share Capital Share Premium Issued 1.000 0 Unissued Share Capital Issued stock certificate.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.