Chapter 14

Book Value Per Share

PROBLEM 3: EXERCISES

1. Solutions:

Total shareholders' equity, excldg.

5,980,000
subscription receivable (5.9M + 80K)
Preference shareholders' equity:
1,500,00
Liquidation value (6,000 shares x ₱250)
0
(1,884,000
Dividends in arrears (1.2M x 8% x 4 yrs.) 384,000
)
Ordinary shareholders' equity 4,096,000

1,884,00
Preference shareholders' equity
0
Divide by: No. of preference shares outstanding 6,000
Book value per share (Preference shares) 314.00

4,096,00
Ordinary shareholders' equity
0
Divide by: No. of ordinary shares outstanding a 36,250
Book value per share (Ordinary shares) 112.99

a
Ordinary shares issued (3.6M / 100par) 36,000
Subscribed shares (400K / 100par) 4,000
Treasury shares (300K / 80 cost per share) (3,750)
Outstanding ordinary shares 36,250

2. Solution:

Total shareholders' equity, excldg.

5,980,000
subscription receivable (5.9M + 80K)
Preference shareholders' equity:
1,500,00
Liquidation value (6,000 shares x ₱250)
0
(1,596,000
Dividends in arrears (1.2M x 8% x 1 yr.) 96,000
)

1
Ordinary shareholders' equity 4,384,000

1,596,00
Preference shareholders' equity
0
Divide by: No. of preference shares outstanding 6,000
Book value per share (Preference shares) 266.00

4,384,00
Ordinary shareholders' equity
0
Divide by: No. of ordinary shares outstanding a 36,250
Book value per share (Ordinary shares) 120.94

a
Ordinary shares issued (3.6M / 100par) 36,000
Subscribed shares (400K / 100par) 4,000
Treasury shares (300K / 80 cost per share) (3,750)
Outstanding ordinary shares 36,250

3. Solution:

Total shareholders' equity, excldg.

5,980,000
subscription receivable (5.9M + 80K)
Preference shareholders' equity:
1,500,00
Liquidation value (6,000 shares x ₱250)
0
(1,500,000
Dividends in arrears -
)
Ordinary shareholders' equity 4,480,000

1,500,00
Preference shareholders' equity
0
Divide by: No. of preference shares outstanding 6,000
Book value per share (Preference shares) 250.00

4,480,00
Ordinary shareholders' equity
0
Divide by: No. of ordinary shares outstanding a 36,250
Book value per share (Ordinary shares) 123.59

a
Ordinary shares issued (3.6M / 100par) 36,000
Subscribed shares (400K / 100par) 4,000
Treasury shares (300K / 80 cost per share) (3,750)
Outstanding ordinary shares 36,250

2
4. Solution:
Total shareholders' equity 13,740,000

12% PS (aggregate par value) (2,000,000)

12% PS (dividends) - (2M x 12% x 3 yrs.) (720,000)

14% PS (aggregate par value) (3,000,000)

14% PS (dividends) - (3M x 14% x 1 yr.) (420,000)

Common stock (aggregate par value) (5,000,000)

Common stock (dividends) - (5M x 12% x 1 yr.) (600,000)

Amount for allocation 2,000,000

12% PS (2M x 2/10) (400,000)

14% PS (2M x 3/10) (600,000)

Common stock (2M x 5/10) (1,000,000)

As allocated -

Ordinary shareholders' equity:

Aggregate par value 5,000,000

Dividends 600,000

Participation 1,000,000

Total 6,600,000

Divide by: Outstanding shares 50,000

Book value per ordinary share

3
 132.00