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

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

Section: Chapter Questions

Problem 8QE

See similar textbooks

Similar questions

Putt Corporation acquired 70 percent of Slice Company's voting common stock on January 1, 20X3, for $158,900. Slice reported common stock outstanding of $100,000 and retained earnings of $85,000. The fair value of the noncontrolling interest was $68,100 at the date of acquisition. Buildings and equipment held by Slice had a fair value $25,000 higher than book value. The remainder of the differential was assigned to a copyright held by Slice. Buildings and equipment had a 10-year remaining life and the copyright had a 5- year life at the date of acquisition. Trial balances for Putt and Slice on December 31, 20X5, are as follows: Putt Corporation Slice Company Debit Credit Debit Credit Cash $ 15,850 $ 58,000 Accounts Receivable 65,000 70,000 Interest & Other Receivables 30,000 10,000 Inventory 150,000 180,000 Land 80,000 60,000 Buildings & Equipment 315,000 240,000 Bond Discount 15,000 Investment in Slice Company 157,630 Cost of Goods Sold 375,000 110,000 Depreciation Expense 25,000…
How much is the retained earnings – appropriated? 2. How much is the total legal capital of BEBEBOY?
Which of the following statements is correct regarding working paper entries to facilitate the preparation of the consolidated financial statements? * A. Debit Non-controlling Interest in Net Assets in the working paper to assign to the non-controlling stockholders their share in the gain on bargain purchase. b. Debit Share Premium relating to issuance of stocks in the working paper to record the cost of SEC registration and listing fees. c. Credit Investment in Subsidiary Company Stock in the working paper to record the purchase of outstanding shares from subsidiary company. d. Credit Equipment in the working paper to adjust a fair value differential of an overvalued equipment.
Under PFRS9, reclassification of investment in equity securities: A. Is allowed as long as it is based on a change in the entity's business model B. Is allowed, as long as the reclassification is made within the year the investment was acquired C. Is allowed, since the entity always has the option to carry the investment as either FVPL or FVOCI D. Is not allowed
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
REQUIRED Use the information provided below to prepare the Statement of Financial Position of Glendale Limited as at 31 May 2020. Ensure that the statement includes headings for Non-current assets, Current assets, Equity, Non-current liabilities and Current liabilities. The notes to the financial statements are not required. INFORMATION The following balances were obtained from the accounting records of Glendale Limited after all the adjustments and closing transfers were completed on 31 May 2020: R Shares in XYZ Limited Ordinary share capital Retained income Loan: Brits Bank 600 000 1434 000 300 000 150 000 Equipment Accumulated depreciation on equipment Inventory Debtors control 1 380 000 180 000 210 000 60 000 Provision for bad debts 3 000 Accrued income 6 000 Bank (DR) 69 000 Cash float 6 000 135 000 Creditors control Accrued expenses South African Revenue Services: Company tax payable Shareholders for dividends (Dividends payable) 42 000 15 000 72 000 Additional information R30…
An entity shall adjust the carrying amount of the dividend payable at the end of each reporting period and at the date of settlement with any changes in the carrying amount of the dividend payable recognized as component of other comprehensive income b. directly in retained earnings c. as gain or loss on property dividend d. as adjustment of share premium
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.
5. Which of the following is incorrect regarding inclusion or shares in the weighted average number of shares? d. Ordinary shares issued as a result of the conversion of a debt instrument to ordinary shares are included from the date that interest ceases to accrue. b. Ordinary shares issued in exchange for the settlement of a lnability of the entity are included from the settlement date. C. Ordinary shares issued for the rendering of services to the entity are included as the services are rendered. d. Ordinary shares issued in exchange for cash are included when cash is received. 6. The weighted-average number of shares outstanding during the period and for all the periods presented (other than the conversion of potential ordinary shares) shall be adjusted for a. Any change in the number of ordinary shares without a change in resources. b. Any prior-year adjustment. C. Any new issue of shares for cash. d. Any convertible instruments settled in cash. 7. If a bonus issue occurs between…
A company issued rights to its existing shareholders to purchase ordinary shares. When the rights are exercised, share premium would be credited if the par value was the same as the purchase price but less than the fair value at the date of exercise exceeded the purchase price was less than the purchase price was the same as the purchase price
Please answer requirement 1 - 9
Repurchased share transactions are reported on the: A) income statement as a part of continuing operations B) statement of changes in shareholders' equity C) income statement D) statement of retained earnings