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Vdocuments - MX - Answers Chapter 3 Vol 2 Rvsed
Vdocuments - MX - Answers Chapter 3 Vol 2 Rvsed
SHAREHOLDERS’ EQUITY
PROBLEMS
Land 1,000,000
Building 2,950,000
Ordinary Share (12,500 x 300) 3,750,000
Share Premium - Ordinary 200,000
3-2.
a. Cash (10,000 x 200) 2,000,000
Ordinary Share (10,000 x 150) 1,500,000
Share Premium - Ordinary 500,000
c. Cash 18,000,000
Preference Share 2,500,000
Ordinary Share 10,000,000
Share Premium – Preference 2,000,000
Share Premium – Ordinary 3,500,000
MV: Pref – 5,000 x 800=4M
Ord – 100,000 x 120 = 12M
Allocation:
Pref: 18M x 4/16 = 4.5M
Ord: 18M x 12/16 = 13.5M
e. Land 5,000,000
Cash 40,000
Chapter 3 – Shareholders’ Equity
The total amount of P2,188,800 may also be obtained without necessary preparing
the shareholders’ equity in good format (if not required) as follows:
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Chapter 3 – Shareholders’ Equity
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Chapter 3 – Shareholders’ Equity
(b)
Shareholders’ Equity
Contributed Capital
Ordinary Share, P100 par, 300,000 shares authorized, 193,000 shares
issued, 192,500 shares outstanding P19,300,000
Share Premium –Ordinary 4,080,000
Paid in Capital from Treasury Shares 52,500
Total contributed capital P23,432,500
Retained Earnings
Appropriated for Treasury Share P 47,500
Unappropriated 1,375,000 1,422,500
Treasury Shares, 1,000 ordinary shares, at cost (47,500)
Total Shareholders’ Equity P24,807,500
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Chapter 3 – Shareholders’ Equity
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Chapter 3 – Shareholders’ Equity
(b)
01/01/07 Granted 100 share options to each of its 200 employees to buy
P100 par ordinary share at P220 per share. The options are
exercisable starting January 1, 2010 provided that the employees
are still in the service. Options expire on December 31, 2011.
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Chapter 3 – Shareholders’ Equity
01/01/07 Memo: Granted 10,000 share options for the purchase of P100 par
ordinary shares at P120 per share. The options vest once the market
price of ordinary shares reached P200. Options expire at the end of
2010.
12/31/07 Compensation Expense 66,667
Share Options Outstanding 66,667
(10,000 x 20) / 3 years
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Chapter 3 – Shareholders’ Equity
and expire on December 31, 2011. The number of share options will be based
on the level of sales for 2009.
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Chapter 3 – Shareholders’ Equity
(b) (2) Assuming that the rights were exercised on December 31, 2010, when the
market price is P172.
12/31/10 Share Appreciation Rights Payable 450,000
Compensation Expense 70,000
Cash 10,000 x (172-120) 520,000
(c)
01/01/07 Granted each of the four executives the right to choose either
1,000 ordinary shares or to receive cash payment equal to 900
shares, conditional upon the completion of three years of service.
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Chapter 3 – Shareholders’ Equity
(c) Memo: Effected a 2 for 1 stock split on 100,000 shares P100 par
previously issued and outstanding.
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Chapter 3 – Shareholders’ Equity
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Chapter 3 – Shareholders’ Equity
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Chapter 3 – Shareholders’ Equity
Land 1,500,000
Buildings 1,875,000
Machinery and Equipment 350,000
Accum. Depreciation – Buildings 875,000
Accum. Depreciation – Machinery & Equipment 150,000
Revaluation Surplus 3,700,000
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