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    05 - Task Performance - 1-InterAcctng2

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    Jomari Escarilla
    Fabi Corporation allocated proceeds from the issuance of ordinary and preference shares. Preference shares were issued at a 27% premium to par value, resulting in a share premium of P800,000. Ordinary shares were also issued at a premium, resulting in total share premium of P7,700,000, of which P6,200,000 is from ordinary shares.

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    05 - Task Performance - 1-InterAcctng2

    Uploaded by

    Jomari Escarilla
    352 views2 pages
    Fabi Corporation allocated proceeds from the issuance of ordinary and preference shares. Preference shares were issued at a 27% premium to par value, resulting in a share premium of P800,000. Ordinary shares were also issued at a premium, resulting in total share premium of P7,700,000, of which P6,200,000 is from ordinary shares.

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    05_Task Performance_1-InterAcctng2

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    Fabi Corporation allocated proceeds from the issuance of ordinary and preference shares. Preference shares were issued at a 27% premium to par value, resulting in a share premium of P800,000. Ordinary shares were also issued at a premium, resulting in total share premium of P7,700,000, of which P6,200,000 is from ordinary shares.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    352 views2 pages

    05 - Task Performance - 1-InterAcctng2

    Uploaded by

    Jomari Escarilla
    Fabi Corporation allocated proceeds from the issuance of ordinary and preference shares. Preference shares were issued at a 27% premium to par value, resulting in a share premium of P800,000. Ordinary shares were also issued at a premium, resulting in total share premium of P7,700,000, of which P6,200,000 is from ordinary shares.

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    05_Task Performance_1

    Answers:

    Case 1: Fabi Corporation

    Market Value Proceeds Allocation


    (10,000 × 360) 36/90
    Ordinary shares 3,200,000
    P3,600,000 or 40%
    (20,000 × 270) 54/90
    Preference shares 4,800,000
    5,400,000 or 60%
    Total 9,000,000 8,000,000

    1. What amount should be reported as share premium from preference shares?


     P800,000

    Proceeds to Preference shares 4,800,000


    Less: Par Value Preference shares (20,000 × 200) (4,000,000)
    Share Premium from Preference shares 800,000

    Cash 11,000,000
    Less: Bonds payable (4,000,000)
    Residual Amount 7,000,000
    Less: Par Value of Ordinary shares (500,000)
    Share Premium 6,500,000

    Proceeds to Ordinary shares 3,200,000


    Less: Par Value Ordinary shares (10,000 × 200) (2,000,000)
    Share Premium ordinary shares 1,200,000

    Share Premium 7,700,000

    2. What amount should be reported as share premium from ordinary shares?


     P6,200,000

    Proceeds to Ordinary shares 3,200,000


    Less: Preference shares (1,000,000)
    Residual Amount 2,200,000
    Cash 11,000,000
    Less: Share Capital (5,000,000)
    Market Value 6,000,000
    Residual Amount 2,200,000
    Less: Par Value of Ordinary shares (2,000,000
    Share Premium- Ordinary shares P4,000,000
    Share Premium from Ordinary shares (2,200,000+4,000,000) = P6,200,000
    Case 2: Recayo
    Corporation
    Shares Share Share Shareholder’s
    Capital Premium Equity
    January 01 P30,000 P3,000,000 P1,500,000 P4,500,000
    February 01 2,000 200,000 50,000 250,000
    March 01 (5,000) — — (600,000)
    October 31 — — 1,100,000 1,100,000
    November 15
    (32,000 × 2) 64,000 — —
    (5,000 × 2) 10,000 — —
    December 15 20,000 1,000,000 500,000 1,500,000
    December 31 — — — 2,000,000
    Total P74,000 P4,200,000 P3,150,000 P8,750,000

    3. What amount should be reported as share capital at year-end?


     P4,200,000
    4. What amount should be recognized as share premium at year-end?
     P3,150,000
    5. What is the total shareholders’ equity at year-end?
     P8,750,000

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