Clarissa Nastania

19/441354/EK/22372
TUGAS AKUNTANSI MENENGAH II
DILUTIVE SECURITIES & EARNINGS PER SHARE

P16-1
The equity section of Martino AG at the beginning of current year appears below.

Share capital – ordinary, €10 par value, authorized €3.000.000

1.000.000 shares, 300.000 shares issued and outstanding
Share premium – ordinary 600.000
Retained earnings 570.000

During the current year, the following transactions occured.

1. The company issued to the shareholders 100.000 rights. Ten rights are needed to buy one
share at €32. The rights were void after 30 days. The market price of the shares at this
time was €34 per share.
2. The company sold to the public a €200.000, 10% bond issue at 104. The company also
issued with each €100 bond one detachable share-purchased warrant, which provided for
the purchase of ordinary shares at €30 per share. The net present value of the bonds
without the warrants was €192.000.
3. All but 5.000 of the rights issued in (1) were exercised in 30 days.
4. At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining
were outstanding and in good standing.
5. Durng the current year, the company granted share options for 10.000 ordinary shares to
company excecutives. The company using a fair value option-pricing model determines
that each option is worth €10. The option price is €30. The options were to expire at year-
end and were considered compensation for the current year.
6. All but 1.000 shares related to the share-option plan were exercised by year-end. The
expiration resulted because one of the executives failed to fulfill an obligation related to
the employment contract.

Instruction
a. Prepare general journal entries for the current year to record the transactions listed above.

1. No entry

2. Cash €208.000
Bonds payable €192.000
Share premium – share warrants €16.000

3. Cash €304.000
(€32 x 95.000/ €10)
Share capital – ordinary €95.000
(€10 x 95.000/ €10)
Share premium – ordinary €209.000
 Clarissa Nastania
19/441354/EK/22372
4. Share premium – share warrants €12.800
(80% x €16.000)
Cash €48.000
[(€200.000 / 100 x 80%) x €30]
Share capital – ordinary €16.000
[(€200.000 / 100 x 80%) x €10]
Share premium – ordinary €44.800

5. Compensation expense €100.000

Share premium – share options €100.000

6. Share premium – share options €90.000

(90% x €100.000)
Cash €270.000
(9.000 x €30)
Share capital – ordinary €90.000
(9.000 x €10)
Share premium – ordinary €270.000
Share premium – share options €10.000
(1.000 x €10)
Compensation expense €10.000

b. Prepare the equity section of the statement of financial position at the end of the current
year. Assume that retained earnings at the end of the current year is €750.000.

Martino AG
Statement of Financial Position
At the end of current year
Equity
Share capital – ordinary, par value €10, authorized €3.201.000
1.000.000, 320.100 shared and issued
Share premium – ordinary 1.123.800
Share premium – share warrants 3.200
Retained earnings 750.000
€5.078.000