JEROME O.

MENDIOLA, CPA

SHAREHOLDERS
EQUITY
 I want to
invest CREDIT BALANCE
A= L + OE

Share Capital

INVESTMENT IN EQUITY
MENDIOLA’S CAPITAL
SECURITIES PARTNER’S CAPITAL
SHAREHOLDERS SHARE CAPITAL
Number of shares multiply by PAR value

9/3/20XX PRESENTATION TITLE 2

 DEFINITION OF TERMS
AUTHORIZED NUMBER OF SHARES

SHARE CAPITAL
UNISSUED SHARES ISSUED SHARES SUBSCRIBED SHARES

A Corporation was SUBSCRIBED SHARE CAPITAL

authorized to issue
100,000 shares. 60K
shares have been fully
paid while 15,000 shares
were not yet paid by the TREASURY SHARES OUTSTANDING SHARES
subscribers. In addition
8,000 fully paid shares
were reacquired from
shareholders
9/3/20XX PRESENTATION TITLE 3
 SHARES

ORDINARY SHARES PREFERENCE SHARES

SHARE PREMIUM SUBSCRIPTION RECEIVABLE

EXCESS OF CONSIDERATION OVER PAR REPRESENTS THE AMOUNTS OF SUBSCRIPTION NOT
VALUE OR STATED VALUE YET FULLY PAID.
GENERAL RULE: DEDUCTION SHE
XPN: COLLECTIBLE IN 1 YEAR CURRENT ASSET
PAR VALUE
MINIMUM VALUE ASSIGNED TO EACH CONTRIBUTED CAPITAL
SHARE CONTIBUTED BY THE SHAREHOLDERS TO THE ENTITY
STATED VALUE COMPUTED AS: SHARE CAPITAL
SHARE PREMIUM
XXX
XXX
NOMINAL VALUE ASSIGNED TO NO-PAR.
SUBSCRIBED SHARE CAPITAL XXX
P5.00 PER SHARE
LESS: SUB. RECEIVABLE (XXX)
TREASURY SHARES (XXX)
PRESENTATION TITLE 4
 ISSUED SHARES plus SUBSCRIBED SHARES
PAR-VALUE
LEGAL CAPITAL NO-PAR-VALUE
ISSUED SHARES plus SUBSCRIBED SHARES plus SHARE PREMIUM
PORTION OF EQUITY THAT A
CORPORATION CANNOT LEGALLY
DISTRIBUTE TO ITS SHAREHOLDERS
TRUST FUND DOCTRINE

RETAINED EARNINGS
CUMULATIVE BALANCE OF PREIODIC
EARNINGS

9/3/20XX PRESENTATION TITLE 5

ACCOUNTING FOR ISSUANCE OF SHARE CAPITAL
CASH
NON-CASH ASSET
PREVIOUS LIABILITY
SERVICES PROVIDED BY EMPLOYEES
SERVICES PROVIDED BY NON-EMPLOYEES

9/3/20XX PRESENTATION TITLE 6

ACCOUNTING FOR ISSUANCE OF SHARE CAPITAL
CASH
NON-CASH ASSET
PREVIOUS LIABILITY
SERVICES PROVIDED BY EMPLOYEES
SERVICES PROVIDED BY NON-EMPLOYEES

9/3/20XX PRESENTATION TITLE 7

ACCOUNTING FOR ISSUANCE OF SHARE CAPITAL
CASH

A CORPORATION IS AUTHORIZED TO ISSUE 200,000 SHARES

OF ORDINARY SHARES WITH PAR VALUE OF P50 AND 50,000
PREFERENCE SHARES WITH PAR VALUE OF P100. DURING THE
CURRENT MONTH, IT HAD THE FOLLOWING EQUITY
TRANSACTIONS

A. Issued 10,000 ordinary shares by receiving a total of

P720,000
B. Issued 25,000 preference shares for P125

9/3/20XX PRESENTATION TITLE 8

ACCOUNTING FOR ISSUANCE OF SHARE CAPITAL
CASH
NON-CASH ASSET
PREVIOUS LIABILITY
SERVICES PROVIDED BY EMPLOYEES
SERVICES PROVIDED BY NON-EMPLOYEES

9/3/20XX PRESENTATION TITLE 9

ACCOUNTING FOR ISSUANCE OF SHARE CAPITAL
CASH
NON-CASH ASSET
PREVIOUS LIABILITY
SERVICES PROVIDED BY EMPLOYEES
SERVICES PROVIDED BY NON-EMPLOYEES

9/3/20XX PRESENTATION TITLE 10

 ACCOUNTING FOR ISSUANCE OF SHARE CAPITAL
NON-CASH ASSET
HIERARCHY DURING THE YEAR, A CORPORATION ISSUED 30,000 OF ITS
1. FV OF NON-CASH ASSET P100 PAR VALUE IN EXCHANGE OF LAND
2. FV OF SHARES ISSUED SCENARIOS:
3. PAR VALUE OF SHARES 1. THE LAND HAD FV OF P4,200,000 WHILE THE SHARES
HAVE FV OF P150.
2. THE LAND HAD FV OF P4,200,000 WHILE THE FV OF
SHARES CANNOT RELIABLY ESTIMATED
3. THE FV OF LAND CANNOT RELIABLY ESTIMATED WHILE THE
SHARES FV IS P150
4. BOTH LAND AND SHARES CANNOT RELIABLY ESTIMATED

9/3/20XX PRESENTATION TITLE 11

 ACCOUNTING FOR ISSUANCE OF SHARE CAPITAL
NON-CASH ASSET
BASKET ISSUANCE OF DURING THE YEAR, A CORPORATION ISSUED 120,000 OF ITS
DIFFERENT TYPE OF P25 PAR VALUE ORDINARY SHARES AND 25,000 P100 PAR
SHARES VALUE PREFERANCE SHARES IN BASKET ISSUE PRICE OF
P9,000,000
1. RELATIVE FV
2. ALLOCATE BASKET 1. THE ORDINARY SHARES HAVE FV OF P50 WHILE PREF.
ISSUE PRICE TO THE SHARES HAVE P160 FV
EXTENT OF THE FAIR 2. THE ORDINARY SHARES HAVE FV OF P50 WHILE THE FV
VALUE OF SHARES OF PREF. SHARES CANNOT RELIABLY ESTIMATED
THAT IS
DETERMINABLE. ANY
EXCESS SHALL BE
ATTRIBUTED TO THE
OTHER SHARE.
9/3/20XX PRESENTATION TITLE 12
ACCOUNTING FOR ISSUANCE OF SHARE CAPITAL
CASH
NON-CASH ASSET
PREVIOUS LIABILITY
SERVICES PROVIDED BY EMPLOYEES
SERVICES PROVIDED BY NON-EMPLOYEES

9/3/20XX PRESENTATION TITLE 13

 SUBSCIPTION OF SHARES
A CORPORATION MAY ISSUE SHARES ON AN INSTALLMENT BASIS
CASH XXX On January 1, 2023, a
corporation received
SUBSCRIPTION RECEIVABLE XXX subscription on its P20 par value
from 5 subscribers at a
SSC XXX subscription price of P35/share.
Each subscribed 10,000 shares.
SHARE PREMIUM XXX Downpayment is 25%.
CASH XXX
February 1, 2023 :each
SUBSCRIPTION RECEIVABLE XXX
subscribers paid 60% of
subscription balance.
SSC XXX
February 15: 3 of them paid
SHARE CAPITAL XXX
full amount

March 1- The remaining

9/3/20XX subscribers paid in full PRESENTATION TITLE 14
DELIQUENT SHARES
HIGHEST BIDDER
On June 1, 2023, a corporation received subscription at P40 per
share for 50,000 shares par value is P30. A downpayment is
30%.

However, the subscriber failed to pay the balance as a result

declared as delinquent. Total costs of publishing and organizing
the delinquency sale amounted to P150,000

The followers bidders were received

BIDDER A 30,000
BIDDER B 20,000
BIDDER C 26,000

9/3/20XX PRESENTATION TITLE 15

RETIREMENT OF SHARES
IT WILL DECREASE THE VALUE OF SHE
PAR VALUE>RETIREMENT PRICE= SHARE PREMIUM-RETIREMENT
PAR VALUE< RETIREMENT PRICE= CHARGED TO
1. SP RELATED TO ISSUANCE OF RETIREMENT SHARES
2. RETAINED EARNINGS
On January 1, 2023, an entity reported the following information:
SHARE CAPITAL, P50 PAR, 200,000 SHARES ISSUED P10M
SHARE PREMIUM P 2M
RETAINED EARNINGS P 5M

1. 4,000 SHARES WERE RETIRED BY PAYING P45/SHARE

2. 4,000 SHARES WERE RETIRED BY PAYING P52/SHARE
3. 4,000 SHARES WERE RETIRED BY PAYING P65/SHARE
9/3/20XX PRESENTATION TITLE 16
 DEBIT BALANCE
TREASURY SHARES
MEASURED AT PURCHASE PRICE
REISSUE PRICE>PURCHASE PRICE= SHARE PREMIUM-TREASURY
REISSUE PRICE<PURCHASE PRICE=
1. SHARE PREMIUM-TREASURY (EXTENT OF BALANCE)
2. RETAINED EARNINGS
RETIREMENT OF TS
PAR VALUE>PURCHASE PRICE= SHARE PREMIUM-TS
PAR VALUE<PURCHASE PRICE= 1. SP-RELATED TO ORIGINAL ISSUANCE OF RETIREMENT TS
2. SP- TS
 3. RETAINED EARNINGS

9/3/20XX PRESENTATION TITLE 17

 DEBIT BALANCE
TREASURY SHARES 1. ALL TS WERE SOLD FOR
P32/SHARE
MEASURED AT PURCHASE PRICE 2. ALL TS WERE SOLD FOR
P27/SHARE
REISSUE PRICE>PURCHASE PRICE= SHARE PREMIUM-TREASURY
3. ALL TS WERE SOLD FOR P24
REISSUE PRICE<PURCHASE PRICE=
1. SHARE PREMIUM-TREASURY (EXTENT OF BALANCE)
2. RETAINED EARNINGS
At the beginning of the current year, an entity reported the following information
SHARE CAPITAL P20 PAR, 400,000 SHARES ISSUED P8,000,000
SP- ISSUANCE 1,200,000
SP-TS 40,000
RETAINED EARNINGS 5,000,000
TS, 20,000 SHARES, P28 COST 560,000

9/3/20XX PRESENTATION TITLE 18

 DEBIT BALANCE
TREASURY SHARES
RETIREMENT OF TS
PAR VALUE>PURCHASE PRICE= SHARE PREMIUM-TS
PAR VALUE<PURCHASE PRICE= 1. SP-RELATED TO ORIGINAL ISSUANCE OF RETIREMENT TS
2. SP- TS
 3. RETAINED EARNINGS

At the beginning of the current year, an entity reported the following information
SHARE CAPITAL P20 PAR, 400,000 SHARES ISSUED P8,000,000
SP- ISSUANCE 1,200,000
SP-TS 40,000
RETAINED EARNINGS 5,000,000
TS, 20,000 SHARES, P28 COST 560,000

1. ALL TS WERE RETIRED

9/3/20XX PRESENTATION TITLE 19
 SHARE ISSUANCE COST
1. DIRECT DEDUCTION FROM THE RELATED SHARE PREMIUM
2. SP FROM PREVIOUS SHARE ISSUANCE
3. RETAINED EARNINGS

At the beginning of the current year, an entity reported the following information
SHARE CAPITAL P30 PAR, P6,000,000
SP- ISSUANCE 200,000
RETAINED EARNINGS 1,500,000
On December 31, 2023, the entity issued 50,000 shares at P35 per share.
1. Transaction cost incurred P150,000
2. Transaction cost incurred P300,000
3. Transaction cost incurred P490,000

9/3/20XX PRESENTATION TITLE 20

DONATION OF ENTITY’S OWN SHARES
SHAREHOLDERS MAY RETURN SHARES WITHOUT ASKING ANY AMOUNT.
MEMORANDUM ENTRY ONLY. IF DONATED SHARES ARE REISSUED THAT A CREDIT
SP-DONATED SHARES
SHAREHOLDERS DONOR SP-DONATION

NON-SHAREHOLDER DONOR OTHER INCOME

AN ENTITY RECEIVED A LAND WITH FAIR VALUE

P2,400,000 FROM A DONOR

9/3/20XX PRESENTATION TITLE 21

CONVERSION OF PREFERENCE SHARES
A Corporation maintains 80,000 convertible preference shares with par value of
P100. These were all issued a premium of P2,000,000. Each PS is convertible to 4
Ordinary shares with par value of P20
1. All of the PS were converted
2. 60,000 PS were converted

9/3/20XX PRESENTATION TITLE 22

SHARE SPLITS
EFFECT OF SPLIT-UP EFFECT OF SPLIT DOWN
NUMBER OF SHARES INCREASE DECREASE
PAR VALUE DECREASE INCREASE

Currently, an entity maintains 120,000 shares with par value of P60

Scenario
1. Split up were 2 new shares were exchange for each share
2. Split down were 1 new shares were exchange for every 2 shares
3. Split up were 3 new shares were exchange for every 2 shares
4. Split down were 2 new shares were exchange for 3 share

9/3/20XX PRESENTATION TITLE 23

 REDEEMABLE PS
LIABILITY ACCOUNT
DIVIDENDS PAID TO THESE SHARES ARE REPORTED AS INTEREST EXPENSE

AT THE BEGINNING OF 2023 ABC COMPANY ISSUED 6% PS WITH TOTAL PAR

VALUE OF P3,000,000. THESE SHARES REQUIRED TO BE REDEEMED ON DECEMBER
31, 2025, WITH ANNUAL DIVIDENDS REQUIRED TO BE PAID EACH YEAR.

9/3/20XX PRESENTATION TITLE 24

READING ASSIGNMENT
COSTS OF INITIAL PUBLIC OFFERRING OF SHARES
ISSUANCE OF SHARE RIGHTS

9/3/20XX PRESENTATION TITLE 25