4. On January 1, 2019, Kind Company has 10,000 ordinary and 5,000 preference shares outstanding. On December 31, 2020, Kind declared dividends on ordinary shares payable on March 31, 2021. The entity decided to give the shareholders a choice between a P200 cash dividend per share or a property dividend in the form of noncash asset from the inventory with carrying amount of P2,300,000 and fair values less cost to distribute of P2,500,000. Kind estimates that 60% of the ordinary shareholders will take the cash dividend and 40% will elect for the noncash asset. Required: Compute the following: a.) Dividends payable as of December 31, 2019 b.) Assuming the shareholders have chosen the cash alternative, how much Retained Earnings adjustment is needed on the date of payment c.) Assuming the shareholders have chosen the noncash alternative and the fair value of the property dividend changed to P2,600,000, how much Retained Earnings adjustment is needed on the date of payment?

4. On January 1, 2019, Kind Company has 10,000 ordinary and 5,000 preference shares outstanding. On December 31, 2020, Kind declared dividends on ordinary shares payable on March 31, 2021. The entity decided to give the shareholders a choice between a P200 cash dividend per share or a property dividend in the form of noncash asset from the inventory with carrying amount of P2,300,000 and fair values less cost to distribute of P2,500,000. Kind estimates that 60% of the ordinary shareholders will take the cash dividend and 40% will elect for the noncash asset. Required: Compute the following: a.) Dividends payable as of December 31, 2019 b.) Assuming the shareholders have chosen the cash alternative, how much Retained Earnings adjustment is needed on the date of payment c.) Assuming the shareholders have chosen the noncash alternative and the fair value of the property dividend changed to P2,600,000, how much Retained Earnings adjustment is needed on the date of payment?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

4. On January 1, 2019, Kind Company has 10,000 ordinary and 5,000 preference shares
outstanding. On December 31, 2020, Kind declared dividends on ordinary shares payable on
March 31, 2021.
The entity decided to give the shareholders a choice between a P200 cash dividend per share
or a property dividend in the form of noncash asset from the inventory with carrying amount
of P2,300,000 and fair values less cost to distribute of P2,500,000.
Kind estimates that 60% of the ordinary shareholders will take the cash dividend and 40%
will elect for the noncash asset.
Required: Compute the following:
a.) Dividends payable as of December 31, 2019
b.) Assuming the shareholders have chosen the cash alternative, how much Retained
Earnings adjustment is needed on the date of payment
c.) Assuming the shareholders have chosen the noncash alternative and the fair value of the
property dividend changed to P2,600,000, how much Retained Earnings adjustment is
needed on the date of payment?

3. Caring Company owned 6,000 shares of equity securities of Amiable Company with carrying
amount of P80 per share.
On November 15, 2019, Caring Company declares Amiable shares as property dividends to
be paid on February 14, 2020.
The quoted price for Amiable share is P90 on November 15, 2019, P110 on December 31,
2019 and P100 on February 14, 2020.
Required: Compute the following:
a.) Dividends payable as of December 31, 2019
b.) Gain on property dividend distribution

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