Financial Accounting > QUESTIONS & ANSWERS > University of Notre Dame FIN 20150Lesson in Accounting 2b (All)
REVIEW ON THE LAST TOPIC 1. DIFFERENCES BETWEEN MEMO ENTRY METHOD AND JOURNAL ENTRY METHOD 2. IN WHAT PART OF THE BALANCE SHEET DO WE REPORT THE SUBSCRIPTION RECEIVABLE ACCOUNT? 3. WHEN DO WE ISSU... E THE STOCK CERTIFICATE? 4. WHAT ARE THE FOLLOWING? A. CONTRIBUTED CAPITAL B. LEGAL CAPITAL 5. Formula for the following: a. Issued capital b. Unsubscribed share capital c. Issued and outstanding share capital A. Lesson: Delinquent subscription Call date – is the date when the subscribers are required to pay the subscribed shares based on the subscription contract. Delinquent subscription – if the subscriber failed to pay the subscription price within 30 days from call date, said subscription shall be deemed delinquent and shall be advertised for public auction. Highest bidder – is the one who is willing to accept the lowest number of shares in exchange for the amount due. Assuming Jose subscribed for 10,000 shares at P15 per share and he was able to pay only P45,000 and therefore he has still a balance of P105,000. The company received bids from the following: Pedro 8,000 shares Job 6,000 shares Dan 7,000 shares Who is the highest bidder? Solve Problem 5 – ABC Corporation page 219 of the textbook. B. Transaction costs incurred related to issuance of share capital It is recorded as a charge to the related share premium or APIC. When there is no premium or APIC, it shall be charged to expense. What are these expenses? 1. Documentary stamp tax and other percentage taxes related to public offerings of shares. 2. Underwriting costs 3. Newspaper publication fees relating directly to the share issue. 4. SEC registration fees for the new shares. 5. Public relations consultant’s fees6. Road show presentation 7. Stock exchange listing fees. C. Accounting for no-par shares 1. What is a no-par shares? It does not have a nominal value printed on the stock certificate. However, the Board of Directors may assign a stated value in the corporate by-laws, Cash xxx Share capital xxx Paid-in capital in excess of stated value xxx 2. What is a no-par, no stated value share? Cash xxx Share capital xxx D. Issuance of share capital in exchange of non-cash assets or properties. The asset is recorded at its fair market value or the fair market value of the shares whichever is more clearly determinable. Asset (for the asset received) xxx Share capital xxx Share premium xxx E. Issuance of share capital in exchange for services rendered. An expense account is debited for the fair m [Show More]
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