When convertible preference shares are converted into ordinary shares, the excess of the original issuance price of the preference shares over the aggregate par value of the ordinary shares is recognized in Other Comprehensive Income recognized in Profit or Loss credited to Share Premium on Ordinary Shares credited to Share Premium on Preference Shares

When convertible preference shares are converted into ordinary shares, the excess of the original issuance price of the preference shares over the aggregate par value of the ordinary shares is recognized in Other Comprehensive Income recognized in Profit or Loss credited to Share Premium on Ordinary Shares credited to Share Premium on Preference Shares

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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Compare authorized share capital with subscribed share capital.
When the conversion of bonds payable to common stock is recorded under the market value method and the market value of the common stock exceeds the book value of the bonds at date of conversion, the difference is recorded as a debit to Loss on Conversion. debit to Additional Paid-in Capital−Common Stock. debit to Discount on Bonds Payable. debit to Retained Earnings.
In an equity swap where a liability is settled through the issuance of equity securities A.no gain or loss is recognized B.gains are recognized as Share Premium, losses are expensed. C.gain or loss is recognized as the difference between the measurement amount of the equity securities issued and the carrying amount of the liability derecognized D.any apparent gain or loss is recognized in equity as an addition to share premium
Statement 1: Upon issue of share rights, the issuing corporation records the transaction by preparing a journal entry to recognize the additional number of shares that may be acquired through the exercise.Statement 2: When preference shares are issued with detachable warrants, the proceeds should be allocated between the preference shares and the warrants based on the fair values of the two securities at the time of issuance. a) Both statements are true. b) Both statements are false. c) Statement I is true; Statement II is false. d) Statement I is false; Statement II is true.
(18) True or False : Passed dividends on cumulative preferred stock are recorded as a liability.
Identify and explain the various share capital transactions subsequent to original issuance.
How should the excess of the issue price over the par value of the preference shares subscribed be recorded? Select the correct response: as Share Premium when the subscription is collected as a Revenue when the subscription price is collected as Retained Earnings when the subscription is received as Share Premium when the subscription is received
Which statement is true regarding the accounting treatment for convertible preferred shares under IFRS? Question 21 options: a) Convertible preferred shares are initially measured at the fair value of the cash or other asset received. b) At conversion, a gain or loss is recognized on the difference between the carrying value of the equity portion of the shares and the fair value. c) Convertible preferred shares are subsequently measured at fair value. d) The liability and equity elements of convertible preferred shares must be presented separately on the statement of financial position.
1. When an entity issued bonds payable with detachable share warrants, how will share premium be computed if the share warrants are exercised by the bondholders? (Choose an answer and explain why) a. It is the balance of the share warrants outstanding. b. It is the sum of the share warrants outstanding and total par or stated value of the shares issued. c. It is the difference between the proceeds received based on the exercise price and the total par or stated value of the shares issued. d. It is the difference between the proceeds received based on the exercise price plus the share warrants outstanding and the total par or stated value of the shares issued.
The proceeds from a bond issued with non-detachable share purchase warrants should be accounted for entirely as bonds payable entirely as shareholders’ equity partially as unearned revenue and partially as bonds payable partially as shareholders’ equity and partially as bonds payable
TRUE OR FALSE Outstanding shares are the number of shares sold or conveyed to owners.
Which of the following is a current liability? A dividend payable in the form of additional ordinary shares. Dividend in arrears on preference shares. A cash dividend payable to preference shareholders. All of these.