nOWUST Nore Pus 4 ‘azoRTES TReAL 1, statement I: When the Corporation acquires ({ts owf)shares at a price above par, it decreases its retained earnings. 9 NDETECT CN RE Statement II: Treasury shares are always accounted €£ cost) a. True, True b. True, False + False, True d. False, False 2. Which is not an equity instrument? a. Callable preference share / b. Convertible pretezence share G) Preference share with detachable warrant J 4 Redeenable preference share L\AB\LITY 3. Stavenent 1: A corporation nay retssue a previously Gtire¥)share. pie FeTWED, commer RELIEVE Statenent IT: If the etisanait cost ts lover that” She OES nce pried, the aifterence will be charged to share premium retirenent. ¢ \yy a. True, True SP SooK b. true, False c. False, True Coch IM 4. False, False SP-Red SOK 4. Shares issued would exceed shares outstanding as a result of a. Declaration of share split = np effect b. Declaration of share dividends - no effect c. Purchase of treasury shares d. Payment of fully subscribed shares > yo effect 5. Share issue cost are a. Not recorded separately — becoue ord of UP Db. Reported as an asset 1 Reported os a liability a. amortized over tine 6. Dividend paid on redeemable preference shares shall be accounted for as a. Dizect deduction fom zetained earnings I Interest expense as component of finance cost SHE Port 2 ©. Component of other comprehensive incone 4. Deduction from reserves 7. Statement 1: Entity buye 10 shares with P10 par value for P12 each share. The entity's journal entry should include a credit to share capital of P1270. X Statement If: An entity shoulg record share premium on subscription only when the subscription is collected. 1 Cah 12 wee a 1 Cash x* Bi true, False x 1D c. False, True SP @)x10 +20 SSC xx a. False, Fal © @& @ One characteristic of @ coxporation is 2. Unlimited liability of its owners x b. Dissolution upon the death of an owner x . The ease with which ownership is transferred ~ d. Shareholders acting as automatic corperate agents J9. Which of the following should be reported for a capital stock? The share authorized bl the shares issued | The shazes outetanding 4. All of these 10. Contributed capital consist of the following major conponents 2. Legal and stated capital >! Retained earnings and legal capital €. Additional paid in capital and retained earnings 4. Legal capital and additional paid in capital <— 11. Te de an equity instrunent that is subordinate to all other classes of equity instrument, yet carries he Gase HGR 2, Options bl Ordinary shares ~ . Potential ordinary shares a. Preference shares 12. How should the excess of subscription price over the par value of common stock subscribed be recorded? aa > a. As APIC when the subscription is received Rs APIC when the subscription is collected Rs Retained Barnings when the subscription is received As APIC when the capital stock is issued cath Ee How should a cozporation reflect @ treasury stock on its balance sheet? As part of its assets As deduction in the stockholder’s equity section \~ As additional paid in capitel Ag additional shares of capital stock Any lose incurred from the sale of treasury shargs shall be cha: Loss on sale of treasury shares to be reported as other expense Retained earnings and then share premium from treasury shares retained earnings as uv the share premium from treasury shares and then retained earnings Share premium from original issuance, share prenium om treasury shares, A restriction of retained earnings is most likely to be required by the Exhaustion of potential benefits of the investment credit Amortization of past service cost Payment of last maturing series of a serial bond issue Purchase of treas\ ‘stock WAG KAKALIMUTAN Which of the following is a compound financial instrument? Convertible preference shares Convertible bonds Bonds with warrants / Preference share with warrants GOTH EQUITY Choices b and c When preference sha: original issue price, proper accounting for the retirement Increases increases Increases ‘the amount of dividends available to ordinary shareholders the contributed apital of the ordinary sh: reported income for the period the seasury shares . The term “residual owner” means that shareholders holders: Re SP Are entitled to a dividend every year in which the entity earns an income and then iM os SP are purchased and retired by the issuing entity for less than Is00k Jb, Have the right to specific assets if the entity c. Bear the ultimate risks and receive the benefits of ownership d. Can negotiate individual contracts in behalf of the entity. 19, Only @ memorandum entry is made when 2. Entities give share warrants to executives and employees as a form of compensation b. _Batities include share warrante to make a security more attractive c. Entities issu s to existing shareholders \/ d. All of the choices are correct 20. Authorized share cepital refers to the total nusber of shares 2 RSA some $a eines ie exedited to Cath cS amit SESE ater capten SC a, Deduction from shareholder's equity b, Finarefal assex ©) Deduction fron retained earnings 8. Deduction from share preniun 23, Treasury shares were acquired for cash at more than par value ond then subsequently sold for cath ae more than the acquisition price, What LF CHC effect of share proniun from treasury shares? Purchase of treasury shares Sale of tressury angen chore sae Increase ceatesce wo Cash 15 No efsect Cah 10 Is 10 No ettect No etect Qo se 24, Statement I: Accounting for assets and liabilities of Corporation and Partnership is Accounting for assets and las different. SGymt’ Statement T Shareholders’ equity is the same with company’s net asset a. True, True G A-Ls eUITYy Bi true, False o. False, Tete a. False, False 25. Details for each class of share capital should be reported a. On the face of the statenent of financtal position onty Dl in dleclosure notes only —/ G1 On the face of the statenend of finaneial position oF in disetoeure notes GL Oh She face of the statenent of comprehensive sncone oF in the disclosure notes PROBLEM 1 Entity A's shareholder's equity information is as follows: Share Capital (issued 5 000 shares) 250 000 3 Share Preniun 350 000, 0 Retained Earnings 400 000, otal shareholder's Equity 800 000 0 26. All the shares were sold at an identical price. How much is the par value per share ‘and issuance price, respectively? Par value Issue Price a 40 60 b. 50 80 e 50 60 a 40 80PROBLEM 2 At the beginning of current year, Entity & was organized with authorized capital of 100 000 shares with P200 par value. January 10 ~ Issued 25,000 shares at 7220 a-ehare. March 25 - Issued 1,000 shares for Legal services when the fair value was P240 pez share September 30 ~ Issued 5,000 shares for a tract of land when the fair value Vas P260. Jan to March 25 Sept. 0 27. What anount should be reported as share capital? 5 cea coe Qs - 5000K% 200K \OODK = &200% b. 6 200 000 SP - 500K YK WOK 4D K e. 7 440 000 a. § 000 000 28. What anount should be reported for share preniun? = 840 000 * a00 000 e. 540 000 a. 500 000 PROBLEM 3 Encity held 10 000 shares of 710 par walye as a treasury reacguired for P1720 000. at year-end, the @ntity reissued all 10 000 shares for P190 00 Saoasene 29. What is created for the excess of the reissue price over the cost of treasury shares? a. Share capital F100 000 TH Ok Cag, 40k bl Retained earnings P70 000 rok lok f: Gein on sate of tnvestaent 270 000 Gan 1s 4) Share preniua P70 000 Gp TOK ing data at year-end: Authorized share capital 5 000 000 Unissued share capital 2 000 000-13 1sveo Subscribed share capital 1 000 000% Subscription receivable 400 000 7 Share pzemiun 500 0007 Retained earnings unappropriated 609 0009 p¢ Retained earnings appropriated 300 000] RE Revaluation surplus 200 000 Treasury shares, ot cost 100 000, 30. what total amount shouid be reported as shareholder equity? 3000 a. 5 100 000 $000 b. 5 500 000 C 400%) ce. 4 900 000 500K 4. 4 800 000 Wwe 10K PROBLEM 5 Cibo &> At the beginning of current year, Entity E was organized and authorized to iasuf100 000 shares with B50 par value. During the current year, the entity had the following transactions relating to thareholders” equity: SSE Se ov Ts © Issued 10 000 shares at P70 per share. 500K 200k @ Issued 20 000 shares at P80 per share 1000 = =woOK Do piporend nee income B1 90000000 ‘000 2 Rircnssed 3 000 treasury shares at 7100 per share. Goo) 900 [500K Book, 100K (00K) (35 F)31. What amount should be reported as share capital at year-end? a. 1 500 000 b. 3 300 000 fe. 1 200 000 d. 1 800 000 32. What amount should be reported as share premium at year end? a. 800 000 b. 200 000 ce. 600 000 aso 33. What should he reported as total shareholders’ equity at year-end? 2 800 a00 1 500 000 3 000 000 2 000 000 pore Kathryn Co. began of ordinary shares of following transact: operation: ‘tions on January 1, 2022. Kathryn 4s authorized to issue 100,000 Par value and 50,000 preference shares of r value. The affecting shareholder”s equity transpired he first year of van, 01 30,000 ordinary shares were issued for cash at P70 pex share. Jan. 13, 20,000 preference shares were issued for cash at P120. Feb. 10 Land was received in exchange for 3,000 ordinary shares. the land has no feix value on that date | Renee OO See) sash is Lot latateneen snaces sx He eto ore tare seine QU, SHT £00) fe boing wen oegitaldy TV of S\Whurchasea for P2,000,000 and GEth a‘éarrying anaunt on what dace Vor Vel anounting to PI, 200,000. the fair value of the omtinery aed secrerred fares ae of CheGate in O90 and 2200, samereraien = ietetetifctos be Sell pevteeweee WA of 8 fe Snare oon veceteed, Received 30% down payment on the said subscription. No share certificates are issued until a subscription contract is paid in full. Jul. 25 Received full payment on the 5,000 preference shares oridinally ee OS = -SP-OS PS SP-PS SSC SR Determine the following: Jan (50K Cook M4, Ordinary shares issued — Jay [y 2000K — Youk + 2/500" 000 Feb 10 150 & 1,750,000 2 Ward 12 350K “250K YOK “G00 as 880,000 fonts BOK Sook 305 Sly 15 500K Lome) (405) 35, Preference shares iseued — 100K OK k - - ee esotans B50K “240K ney e. 1,780,000 @700\c 36, Share premium igsued to ordinary shareholder's a. 1,050, 000 b. 2,900,000 fe. 1,750, 000 4. 850,000 37, Share premium issued to preference shareholder's a. 2,150,000One, b. 1,080,000 ©. 3,000,000 4. 2,450,000 + Total shareholder's Equity + 8,350,000 + 10,050, 000 6,550,000 4. 5,450,000 PROBLEM 7 Baan ypeginning of the current year, Danie: Company, a clogely-held entisy. sssued (A) bonds with a maturity of P6,000,000, together with 10,000 ordinary £ P50 value, for a combined cash amount of P11,000,000. If issued seBarately, the DAdeyoeT have scld for P47000,000 on an(Os) yield to maturity basis. 39. What amount of the proceeds should be allocated to the ordinary shares? @. 4,000,000 Cash {1000 K b. 7,000, 000 ©. 8,000,000 d. 5,000, 000 40. What amount should be reported for share premium on the issuance of the ordinary shares? 2. 7,500, 000 b. 6,500, 000 ©. 5,500,000 d. 4,500, 000 41, What amount of the proceeds should be allocated to the bonds payable? a. 4,000,000 b. 6,000,000 fe. 2,000,000 d. 6,500, 000 PROBLEM @ Andrea Company was incorporated on January 1, 2022 with the following authorized capitalization: Ordinary share capitat, 200,000 shaxes. G@paD 7100 stated waive 220,000,000 PHOD,00E shares, YO} Preference share capital, 21 share: Axed Fate, P50 par value PLO, 090, 000 During 2022, the entity issued 150,000 ordinary shares for a total of x{6,000,000)and 50,000 preference Shares at P60 per share. In addition, en Decerber 15, 2022, subscription for 20,000 preference shares were teken at a purchase price of P100. These subscribed shares were paid for on January 15, 20Z3-WetTeane for vas PS, 5 for 2022 was P5,000,000 21000 000 1 the total contributed capital on December 31, 7022 ‘a 723,000,000. (SM 13H42 SHAE FSi v/ The subscribed shaxe capital {s included as part of the COMCriBUEed + {y444-ohh capital: a am The contributed cepital includes the retained Garnings but does not K incase the aggregete par value ahd shaza beens Ny. 4 Ihe ozdinary snare capreal Te P1#,000,000 white oie preference share capital 1s #3,000,000 Ce ce decor a2. Which of the following is/are correct? os 1M Ssc (000K, 3 SP 20e0k 2 Iwo of the statenents are correct sem 00 2 only one statenents is correct : °. Three of the statements are incorrect Cash 3000 rvore Souk a Only one of the statenents is incorrect PS 250K we Spoke ce 5oo K. PROBLEM 10Gillian Corp. undertakes an initial public offering for the listing and issuance of 80,000 Rew shares and listing of 120,000 old existing shares. The issued shares are iscued for P60 per share with a par value of P40 per share. The entity incurred the following costes Documentary stanp tax 20,000 / Fairness opinion 100,000, Tax opinion 50,000. Newspaper publication 40,000 Listing fee 100, 000, Prospectus design 20,000 Other joint cost 30,000 43. How much is the share premium in excess of par resulting from the above transactions? —_ eee 1,600,000 140,000 BOK ¥ QW = WOOK 1,460,000, - Z 540,000 WYO K - Share iscuane 140 K 44, What amount should be expensed immediately? 2. 100,000 b. 50,000 ©. 250,000 d. 220,000 PROBLEM 11 jalue of R{50,00. Cost of transfer title and cost of site preparation incucced oy jea amounted te F30,000 and P75,000, respect: Dee te, use sets obey nao ees pln tn ao eceived tzact_at land from one of the major @hazsholdes of the company with a fair (0030-480 fier ap ae" a * Received an office building tron a afGh entreprofely with a fair market valve of GOOK = 600, 000, Received 15,000 entity's own shares tzom a stockholder with a par value of P50 per share and fair value at that tate of P60 per-share. |NEmo Cafe) Received from a shareholder cash of ETS0,000,) no conditions are attached to the ssten, Received P450,000 cash fiona local governaan® unit as an eld fon previous losses sosvered I the entity. Na getr antietonsers aceeche The TS, 000 doneted shaien M56 SUESHIEREES Deleted a 920 per mare. 4 45. How much is the total credit to on the donated capital based on the above transactions? 2. 1,080,000 ed {120 5 (80 +450= (020 4. 1,020, 000 45. What amount should be recognized az income trom government grant? a. 540,000 >. 600,000 e. 400,000 4. 450,000 eo PROBLEM 12 At year-end, Entity G cancelled § 000 shares of PSO par value held in treasury at an Average cost of P120 per share. Before the cancelation, the entity had the ff balances: Shere capital, issued originaizy at 275 per share P2 500 000 150 = 50K share premium 1'280'000" /50k : 26) bar Retained earnings 1 000 000 Treasury hare at cost 00 000 47. What amount should be reported as adjusted share capital at year-end?2 250 000 2 500 000 1 900 000 2-125 000 poe 48. What amount should be reported as adjusted share premium at year-end? 1 250 000 1 125 000 900 000, 800 000 + What amount should be reported as adjusted retained earnings at year-end? ee sarang 1 000 000 1 200 000 775 000, 650 000 aoge 50. How much should be reported as share premium - retirement at yeat-end? ——T—ereerraee 2. 225 000 600 000 hort 375 000, 4.0 OS 250K (5kx50) CP 12aBK (GK 425) RE 925K 1s ook ( ger) DS- 2500 - 250 = 2256 SP. (250 - 195 =],125 RE = \000-225 = 775