Corporation Transactions After Formation
Corporation Transactions After Formation
Corporation Transactions After Formation
Earnings per Share= Net Income attributable to ordinary shareholders / outstanding number of ordinary shares
ABC Corporation
Statement of Changes in Shareholders’ Equity
For the Year Ended December 31, 20xx
Prefer
Ordinary
Preference Share ence
Share
Capital, PXX Par Share
Capital, PX
Value Premi
Par Value
um
January 1 x x x
Issuances of Preference Shares x x
Issuances of Ordinary Shares x
Profit for the Year
December 31 x x x
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Chapter 7 Corporation- Transactions after Formation
DIVIDENDS
1. Declaration Date
2. Shareholders of record Date
3. Payment/Distribution Date
Types:
1. Cash Dividend
Journal Entry to Record the Declaration: Journal Entry to Record the
Retained Earnings x Cash Dividends Payable
Cash Dividends Payable x
3. NonCash/Property Dividend
Journal Entry to Record the Declaration: Journal Entry to Record the
Retained Earnings x Property Dividends Payab
Property Dividends Payable x
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Chapter 7 Corporation- Transactions after Formation
Paid -In Capital from Share Capital Dividends x
*for Preference shares Liquidation Value of PS= Liquidation value per share x outstanding Preference shares
*for Ordinary shares BV=( Total SHE- LV of PS- Dividends in arrears) / outstanding number of shares
1. BASIC EPS
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Chapter 7 Corporation- Transactions after Formation
Retained Earnings x
Appropriated RE x
Reasons:
1. Reacquisition of its own shares---- Treasury Shares
2. Retention as required by the contractual restrictions
3. Discretionary of the BOD---- plant expansion & general contingencies
Retained Earnings
Profit
Dividend
Appropriations
EXAMPLE:
ABC has paid dividends for the last 3 years as follows: year 1- P2.5M, year 2- P3.5M and year 3-P6.5M.
During the last 3 years, the company has the following outstanding share capital: 100,000 shares of P100 par, 12%
preference shares and 500,000 share of P10 par Ordinary shares. Dividends are arrears for 2 years.
Year 2
3,500,000 1,200,000 2,300,000
Dividends per share 12 5
Year 3
6,500,000 1,200,000 5,300,000
Dividends per share 12 11
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Chapter 7 Corporation- Transactions after Formation
Dividends per share 23 2 ###
Year 3 ###
6,500,000 1,200,000 5,300,000 ###
Dividends per share 12 11 ###
0
###
###
3. PS is non-cumulative but participating 0
100, 000 shares 500,000 shares
12% Preference Share Ordinary Share
Year 1
2,500,000 1,200,000 600,000 1,800,000
466,667 233,333 700,000
1,666,666.67 833,333.33
Dividends per share 17 2
Year 2
3,500,000 1,200,000 600,000 1,800,000
1,133,333 566,667 1,700,000
2,333,333.33 1,166,666.67
Dividends per share 23 2
Year 3
6,500,000 1,200,000 600,000 1,800,000
3,133,333 1,566,667 4,700,000
4,333,333.33 2,166,666.67
Dividends per share 43 4
Year 3
6,500,000 1,200,000 600,000 1,800,000
3,133,333 1,566,667 4,700,000
4,333,333.33 2,166,666.67
Dividends per share 43 4
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Chapter 7 Corporation- Transactions after Formation
5. PS is non-cumulative and participating up to an additional 8%
100, 000 shares 500,000 shares
12% Preference Share Ordinary Share
Year 1
2,500,000 1,200,000 600,000 1,800,000
466,667 233,333 700,000
1,666,666.67 833,333.33
Dividends per share 17 2
Year 2
3,500,000 0 0
1,200,000 600,000 1,800,000
800,000 900,000 1,700,000
2,000,000.00 1,500,000.00
Dividends per share 20 3
Year 3
6,500,000 1,200,000 600,000 1,800,000
800,000 3,900,000 4,700,000
2,000,000.00 4,500,000.00
Dividends per share 20 9
Treasury Shares
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Chapter 7 Corporation- Transactions after Formation
Cr. Cash
CR. APIC from share capital retirement
Recapitalization
*change from PAR to No Par and vice-versa - No effect in the TOTAL SHE.
*reduction in the Par Value
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Chapter 7 Corporation- Transactions after Formation
RMATION
gs per Share, Treasury Shares, Share
dinary Shares, Share/Stock Split and
tion
ATEMENTS)
uity
Retai
Ordinary
ned
Share Total
Earni
Premium
ngs
x x x
x
x x
x x
x x x
Pxx
xx
xx
xx Pxx
xx
Pxx
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Chapter 7 Corporation- Transactions after Formation
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Chapter 7 Corporation- Transactions after Formation
ARE
g number of shares
RE
of ordinary shares
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Chapter 7 Corporation- Transactions after Formation
D EARNINGS
Journal Entry to record the cancellation of appropriation to RE:
Appropriated RE x
Retained Earnings x
arrears
current year 2012
2012
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Chapter 7 Corporation- Transactions after Formation
arrears
current year 2013
2013
###
2,400,000 arrears
1,200,000 current year 2012
3,600,000
-2,500,000 2012
1,100,000 arrears
1,200,000 current year 2013
2,300,000
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Chapter 7 Corporation- Transactions after Formation
800,000 / 8.00%
1,133,333 11.33%
800,000 / 8.00%
3,133,333 31.33%
apital reacquisition
outstanding shares but not the total issued shares
led to dividends
iations of RE is required = to the total cost of Treasury shares
ment
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Chapter 7 Corporation- Transactions after Formation
Ordinary Shares
everse
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