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FAR > SHE > Flashcards

SHE Flashcards

1
Q

4 Basic Rights of a Common Stockholder

A
  • Vote and attend annual stockholders’ meeting.
  • Receive dividends
  • Share in the distribution of assets upon liquidation
  • Pre-emptive right
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2
Q

Redeemable vs Callable

Who is the liability? Who is the equity?

A

Redeemable (Gain or Loss)
- shareholder can redeem the shares
- liability for the company
- Dividends - interest expense

Callable (Share Premium or Retained Earnings)
- corporation can call back the shares
- Part of equity
- Dividends - retained earnings

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3
Q

Components of Equity

TROT

A

Total Contributed Capital
Retained Earnings
Other Comprehensive Income
Treasury Shares

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4
Q

Contributed Capital

What are included?

A

Share Capital - @par
Subscribed SC - not fully paid
Share Premium

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5
Q

Share Premium

DSWDQT

A

Donated Capital
Share Warrants
Share Dividend
Quasi-reorganization or Recapitalization
Treasury Share (resale or retirement)

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6
Q

Legal Capital

A

SC + Subscribed SC + SP (for no par)
- SP - excess over par & share dividends only

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6
Q

Subscription Receivable

A

contra-equity account
- except if receivable within 12 months

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7
Q

Donated Capital

What to do to costs incurred for the donation?

A
  • Not expensed or capitalized
  • Deducted from share premium
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8
Q

Minimum amount for No Par

A

5 pesos per share

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9
Q

Measurement for Non Cash / Services

A
  1. FV of non cash / service
  2. FV of share
  3. Par value
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10
Q

Measurement if Used as Payment for Liability

A
  1. FV of shares
  2. FV of liability
  3. CA of liability
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11
Q

Issuance of Ordinary / Preference For Lump Sum

What to do?

A

Allocate based on FV
If no FV
- Allocate first to the one with FV
- Residual approach

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12
Q

Share Issuance Cost, Cost of Listing of Shares, Joint Cost (combination of two)

What is the treatment for each?

A

Share Issuance Cost
- deducted from SP (net of tax)
- if SP is insufficient, Retained Earnings

Cost of Listing of Shares
- expensed

Joint Cost
- allocate to each based on # of shares

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13
Q

Rights Issue

Other Term and What to do?

A

pre-emptive right
memo entry only

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14
Q

Share Split (Part of Recapitalization)

Palatandaan (3 for 1)
Is there a journal entry?

A

3 for 1 (split up)
- tatlo galing sa isa
- tumaas yung # of shares, bumaba par value

memo entry only

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14
Q

Unappropriated RE vs Appropriated RE

A

Unappropriated - free for dividends
Appropriated (Legal, Contractual, Voluntary)

15
Q

Classes of Dividends

Out of Earnings & Out of Capital

A

Dividends out of earnings
- Cash Dividend
- Property Dividend
- Share Dividend

Dividends out of capital
- Liquidating Dividend

16
Q

Dates to Remember in Dividends

A

Date of Declaration
Date of Record
Date of Payment

17
Q

When do you recognize dividends?
What is the journal entry if you recognize? if you pay dividends?
What type of shares are entitled to dividends?

A
  • @ date of declaration
  • Dr. RE // Cr. Dividend Payable
  • Dr. Dividend Payable // Cr. Kind of Dividend
  • outstanding shares (issued + subscribed - treasury)
18
Q

Property Dividend

What is the measurement of the dividend payable?
What is the measurement of the property?
Can there be an impairment loss?
Dividend Payable vs Property

A

Dividend Payable
- Fair Value of Asset

Property (lower of)
- Carrying Amount
- FV less CTS

CA vs FV less CTS = Impairment Loss

Dividend Payable vs Property
- gain or loss

19
Q

Share Dividend

Other term
What happens
How to qualify for large / small share dividend?
How to measure large / small share dividend?

A
  • bonus issue
  • From RE to Share Capital (ALOE remains the same)
  • 20% or more = large
  • large is par, small is fair
20
Q

Liquidating Dividend

A

not an income, return of investment only

21
Q

Quasi - Reorganization

main goal and how?
other term
how many years disclosed?
what will happen after?

A
  • Main goal is to eliminate deficit
    1. Revalue A & L to fair value
    2. Recapitalization
  • Corporate readjustment or fresh start
  • Disclosed for 3 years
  • deficit is eliminated against
    1. Revaluation Surplus
    2. Share Premium
  • restricted after the reorganization (cannot be declared as dividends)
22
Q

Treasury Shares

accounting method
if resold?
if retired?
how much can be acquired?

A

cost method

Resold
- more than cost (Share Premium - TS)
- less than cost (SP - TS or Retained Earnings)

Retired
- lower price (Share Premium - TS)
- higher price (SP - Orig or SP - TS or Retained Earnings)

up to balance of unrestricted RE only

23
Q

Technique in Solving SHE

3 Steps

A
  1. Prepare SHE table
  2. Monitor # of shares (Common/Preference)
  3. Journal entry for some transactions

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