i jesvanice of share capital ghe Revised Corporar nat be issued for a co, f yalue- ne Jaw further provides {; - i st : cannot be issued for less a feores without par value ton Coda nsiderayi, Provides that’a share shall ) n less than the par or stated ) qhus, in the Philippines, ¢ anlue of at least PS, he no-par share must have a stated 1 : n shares We to the ater calue are ool, the press shall be capital account to the extent of the par» with ‘ value, with any excess being reflected as share premium. For example, if 10,000 ordinary shares of P100 par value are , | sold at P150 per share, the journal entry is: i ‘ t i P 2 1,500,000 Ordinary share capital (10,000x P100) 1,000,000 Share premium 500,000 Observe that the excess over the par value is credited to 1 share premium. ; When shares without. par value are sold, the proceeds shall be credited to the share capital account to the extent of the stated value and any excess is credited to share premium. For example, if 20,000 ordinary shares of P50 stated value a are issued at P80 per share, the journal entry is: ¢ Cah 0 “1,600,000 \ Ordinary share capital (20,000 x P50) 1,000,000 »» Share premium . 09,000 ’ , P| ° 4 | £4) \ | 715 : | A Powered by CamScanner Qance of share cap; | Iss Avital for noneash consideration Revised Corporat; @ geration for the ict Code provides that where the, t “stance of share capital is olher than) qual cash or consists of. wright, the valuation theretroperty puch as PateHtjor othe shareholders or the f shall be initially determined gpproval of the itj, t to the oo In oo reoetl a one ie made to the fair value of the 70) ’ ich m ; thi ockholders or board of din ust be determined by the 8 Ge ectors, subject to the approval of the Securities and Exchange Commission. The en Corporation Code further provides that shares Shall not be issued)in exchange for promissory notes or (future service. PFRS 2, paragraph. 10, provides that for equity-settled sharé-based payment transactions, the entity shall measure the goods and services receiyed and the corresponding increase in equity directly at the fair value of the goods and) [serv However, if.the entity’cannot estimate-reliably the fair value | of the goods and services received, the entity shall measure their value and the corresponding increase in equity indirectly by reference to the fair value of the equity — Accordingly, if share capital is issued for noncash consideration such as tangible property, intangible property and services, the share capital is recorded at an amount equal ‘othe following in the order of priority: 4 Fair value of the noncash consideration received . Fair value of the shares issued * Par value of the shares issued Powered by @ CamScannerares of P100 par | vi Ilustration ago ordinate of P1,600,000, “te, igoued 10, a fait An entity Heard itl : is P180 per gh, exchange for 7 — a . ; ; ir yalue © ‘phe fair yalue of P ae total of P1;800,00 Jand is used, the jow : ent ig If the fair value of the onde 1,000,9 : 7 ere share capital on none pares is used, the journal entry ;. If the fair value of the — 1,000.0 a ; meee capital ne Share premium pls Q shares is used, the journal entry jg, ) 1,000,000 ii 1,00( Share capital 0,000 Assuance of share capital for services Shares may be issued for services as long as the services are( already rendered. If the par value of the In conformity with the legal provision and PFRS 2, if shares are issued for services, the shares shall be recorded at the fair value of such services,or fair value of the shares issued, ' whichever is reliably determinable. Tlustration 1 An entity issued 1,000 ordinary sh; ue to law 11, ary shares of P100 par value ca their legal services in getting the corporation The fair val a Prz9,090\ ue of such services is reliably determined to & hare Share cap 120,000 Share premium Pl , sooo = o 20,000 7138 Powered by CamScanner Q