Redemption of shares Redeemable shares (可贖回股份) ►Shares issued with redemption terms at a specified future date Share redemption/buy-back (0) The new Companies Ordinance allows greater flexibility for the share redemption or buy-back ▶ The payment for the redemption may be made: ▶ Out of proceeds of fresh issue of new shares ▶ Out of company's distributable profits Out of capital, following procedures prescribed in the new Companies Ordinance (New Co. Ord.) Accounting for share redemption Procedures Shares to be redeemed (say preference share capital) On redemption by cash Journal Entries Dr. Preference share capital Cr. Preference share capital redemption reserve Dr. Preference share capital redemption reserve Cr. Cash Net effect: Dr. Preference share capital Cr. Bank XX XX

Redemption of shares Redeemable shares (可贖回股份) ►Shares issued with redemption terms at a specified future date Share redemption/buy-back (0) The new Companies Ordinance allows greater flexibility for the share redemption or buy-back ▶ The payment for the redemption may be made: ▶ Out of proceeds of fresh issue of new shares ▶ Out of company's distributable profits Out of capital, following procedures prescribed in the new Companies Ordinance (New Co. Ord.) Accounting for share redemption Procedures Shares to be redeemed (say preference share capital) On redemption by cash Journal Entries Dr. Preference share capital Cr. Preference share capital redemption reserve Dr. Preference share capital redemption reserve Cr. Cash Net effect: Dr. Preference share capital Cr. Bank XX XX

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 3C

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At the date of financial statements, ordinary shares issued would exceed ordinary shares outstanding as a result of the a declaration of share bonus b payment in full of subscribed shares c purchase of treasury shares d. declaration of a share split Quasi-reorganization effected thru revaluation of Property, plant and equipment a.eliminates the deficit by applying the revaluation surplus only up to the extent of the deficit b.eliminates the deficit by applying the share premium balance of a class of share only up to the extent of the deficit. c.eliminates the deficit up to the value of the revaluation surplus d.eliminates the deficit up to the value of the share premium from a class of share.
When are ordinary shares issued as part of a business combinationincluded in the EPS calculation? A. From the midpoint of the accounting yearB. From the end of the accounting periodC. The beginning of the accounting periodD. From the date of acquisition
1. The issuer of an ordinary share dividend to ordinary shareholders should transfer from retained earnings to contributed capital an amount equal to the a. fair value of the shares issued. b. par or stated value of the shares issued. c. book value of the shares issued. d. minimum legal requirements. 2. Statement 1: Treasury shares are a company’s own shares that have been reacquired and retired. Statement 2: The cost method records all transactions in treasury shares at their cost and reports the treasury shares as a deduction from ordinary shares. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect. 3. The declaration and issuance of a share dividend a. increases ordinary shares outstanding and increases total equity. b. increases retained earnings and increases total equity. c. decreases retained earnings but does not change total equity. d. may increase share premium but does not change total…
Subscribed Share Capital shall be presented as an addition to the total Shareholders’ Equity. a reduction from the total Shareholders’ Equity if not readily collectible. a current asset if collectible within twelve months. a reduction from the total Shareholders’ Equity.
Which statement is true concerning retirement of treasury shares. * Retired shares can be reissued at a future date Shares are retired when reacquired Retired shares are those that have been reacquired and cancelled Retired shares remain in the books of accounts of an entity The original issuance price is equal to: Par value only Related Share Premium only Par value less Related Share Premium Par value plus Related Share Premium
Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses as part of the net income are: Securities where a company has holdings of between 20% and 50% Securities where a company has holding of less than 20% O Available-for-sale securities where a company has holdings of less than 20% O Securities where a company has holdings of more than 50%
1. A company declared a cash dividend on its ordinary shares in December 2020 payable in January 2021. Retained earnings would A. increase on the date of declaration. B. not be affected on the date of payment C. not be affected on the date of declaration D. decrease on the date payment 2. Which of the following should be presented in the statement of changes in equity? A. Distributions to owners B. Investments by owners C. Change in ownership interest in subsidiary that does not result in a loss of control D. All of these are presented in the statement of changes in equity
20.IFRIC 17 Distribution of noncash assets to owner provides that at the end of each reporting period and at the date of settlement, the entity shall review and adjust the carrying amount of the dividend payable with any change recognized in Group of answer choices a. share premium b. share capital c. profit or loss d. retained earnings
Which of the following represents a liability? The obligation to pay for goods that an entity expects to order from suppliers in the near future. The obligation to provide goods that customers have ordered and paid for during the current year. The obligation to pay interest on a five-year note payable that was issued the last day of the current year. The obligation to distribute an entity’s own shares next year as a result of a stock/share dividend declared by the board of directors near the end of the current year.
Discuss the accounting treatment, if any, that should be given to each of the following items in computing earnings per share of ordinary shares for financial statement reporting. a. outstanding preference shares issued at a premium with a par value liquidation right. b. the exercise at a price below market value but above book value of an ordinary share option issued during the current fiscal year to officers of the corporation. c. the replacement of a machine immediately prior to the close of the current fiscal year at a cost of 20% above the original cost of the replaced machine. the new machine will perform the same function as the old machine that was sold for its book value.
The issuer of a 5% common stock dividend to common shareholders should transfer from retained earnings to contributed capital an amount equal to the Select one: A. par or stated value of the shares issued. B. market value of the shares issued. C. book value of the shares issued. D. minimum legal requirements.
A Company issued $5,00,000/- new capital divided into $.10/- shares at a premium of $4/- per share payable as On Application $1/- per share On Allotment $4/- per share & $.2/- premium On Final Payment $.5/- per share & $.2/- premium Overpayments on application were to be applied towards sum due on allotment. Where no allotment was made money was to be returned in full. The issue was oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares were allotted only 1,000 shares and applicants for 2,000 were sent letters of regret. All money due on allotment and final call was duly received. Make the necessary entries in the company‟s book.