+SHAREHOLDERS EQUITY

1. The following categories normally appear as components of shareholders equity:

a. Contributed capital+++
b. Retained earnings
c. Other comprehensive income
- Revaluation surplus
- Unrealized gains /losses on financial assets at fair value through other
comprehensive income
- Foreign currency translation adjustment gains and losses
- actuarial gains and losses on defined benefit plan
Other contra-shareholders equity accounts are also reported such as
d. Share capital subscription receivable
- current assets if collectible within a year
- SHE if collections is indefinite
e. Treasury shares
2. Contributed Capital
- otherwise known as paid in capital or represents the amount invested or contributed by
owners.
Share capital (Paid in capital), contributions equal to par or stated value or the total
contribution of the owners in case of no par, no stated value share capital +
Additional paid-in capital ( amount in excess of par or stated value, resale or
retirement of treasury shares, distribution of share dividends ( also called as
capitalization or bonus issue), issuance of detachable share purchase warrants,
changes in par value (or recapitalization), donation of assets to the
corporation, and transactions resulting to corporate readjustments or quasi-
reorganization.
3. Legal Capital
Par value stock (share capital +Subscribe share capital
No par value stock (Share capital + Subscribed share capital +Paid in capital in excess of
stated value)
3. Classes of share capital
a. Ordinary share capital/common stock
bear the ultimate risk or loss and receive the benefits of the success of
the corporation
b. Preference share/preferred stock
is a special class of shares that possesses certain preferential rights that
are not found in an ordinary share. (cumulative, participating,
convertible, callable and redeemable)
Callable- gives the issuing corporation the right but not the obligation to
reacquire or retire the share at a fixed determinable call
price
Redeemable-one that must retires or reacquired by issuing corporation,
either at the option the shareholder, or in most cases ,
at a fixed determinable date.
4. Authorized Shares, Issued Shares ,Outstanding Shares, Subscribed Shares and Treasury Shares
a. Authorized Shares- maximum number of shares that the corporation may issue
as stated in its Articles of Incorporation.
b. Issued shares- represent the number of shares that the corporation has
issued to its shareholders as of specific date.
c. Outstanding Shares - are the shares of stock that have been issued and are
still in the hands of the shareholders as of a specific date.
Total Shares Issued minus Treasury Shares)
d. Treasury Shares- represents shares that have been issued to shareholders
and have been reacquired, but not retired, by the corporation, either
by purchase or donation.
5. Share Capital issued for Cash
6. Share Capital issued other than Cash
a. FMV of the property or services received
b. FMV of the share issued.
7. Delinquent subscriptions-the subscriber defaults in payment of subscription due.
The corporation can resort to any of the following remedies:
- Sue the delinquent subscriber to enforce collection.
- Sell the delinquent shares at public auction to the highest bidder

8. Shares Issued with other Securities (Ordinary shares and Preference shares)
a. Both FMV are given
b. only one of FMV given
9. Share Issue Costs and Stock Assessments (Transaction cost, e.g. registration and other
regulatory fees, amounts paid as legal and printing costs and stamp duties)- deduction from
equity(net of related tax benefit)
- Charge to Additional Paid in Capita (share premium) pertaining to that issue.
- if there is APIC or Share Premium pertaining to that issue, this will be recorded
as expense.
 - Transactions costs that relate to bond issue with share warrants are allocated to
the liability (bonds) and equity components (share warrants outstanding)
10. Shares Reacquired and Retired
- If the retirement price exceeds the original issue price, such as the difference is
debited to the following accounts in the order given:
a. APIC from previous retirement or treasury share transactions of
the same class of stock; and
b. Retained earnings
11. Treasury Shares Reacquired (Cost Method, PFRS)
- Paid in capital from Treasury shares may be debited or credited for treasury
share transactions.
- Retained earnings may be debited but never credited for treasury share
transactions.
12. Donated treasury Shares
- No available Market price
- No available Market price
13. Share Split or Stock Split
- share split = 2 for 1 share split (received 2 shares for every 1 share surrendered)
- reverse share split = 1 for 2 share split ( received 1 share for every 2 shares
surrendered)
14. Retained Earnings (Accumulated Profits under IFRS)
Increase
- Current profit
- Adjustments for correction of prior period errors
- Cumulative effect of change in accounting policy
- Quasi-reorganization
- Revaluation surplus realized
Decrease
- Current loss
- Dividends
- Conversion of share capital
- Treasury share transactions
- Retirement of share capital
- Effects of recapitalization
- Adjustments for correction of prior period errors
- Cumulative effect of change in accounting policy
15. Dividends
Distribution of corporate income to its shareholders on a pro-rata basis.
16. Cash Dividends, Non Cash Assets (Property Dividends), Notes or Other Evidence of Corporate
Indebtedness (Scrip Dividends), and Corporations own share capital (stock dividends or bonus
issue)
Three Important Dates
a. Date of Declaration (record the dividends declaration)
b. Date of Record (determine who will be entitled to dividends, no journal entry)
c. Date of Payment or Distribution
Cash Dividends
Date of Declaration
Retained earnings xxx
Cash dividend payable xxx
Date of Payment
Cash Dividend payable xxx
Cash xxx
Property Dividends
Fixed Assets
Date of Declaration
Retained earnings xxx
Property dividends payable(FMV) xxx
Asset held for distribution (NBV) xxx
Accumulated depreciation xxx
Fixed assets xxx
Increase in market Value of Fixed Assets
Retained earnings xxx
Property dividends payable xxx
(Re-measurement at FMV)
Decrease in Market Value of Fixed Assets
Property dividends payable xxx
Retained earnings xxx
(Re-measurement at FMV)
 Distribution of Fixed Assets
Property dividends payable xxx
Loss on disposal (Property dividends payable
is less than Assets held for distribution) xxx
Assets held for distribution xxx
Gain on disposal Property dividends
is greater than Assets held for
for distribution xxx

Share of Stock of Other Corporation

Date of Declaration
Trading Securities xxx
Unrealized gains or losses
on Trading Securities xxx
( adjust to Market)
Retained earnings xxx
Property dividends payable (FMV) xxx
Increase in FMV
Retained earnings xxx
Property dividends payable xxx
Decrease in FMV
Property dividends payable xxx
Retained earnings xxx
Distribution of Dividends
Property dividends payable xxx
Loss on disposal of securities (Property
Dividends payable is less than Trading
Securities) xxx
Trading Securities xxx
Gain on disposal of Trading
Securities(Property dividends
Payable is greater than Trading
Securities) xxx
Share Dividend (Bonus Issue)
a. Small-Less than 20%(FMV)
b. Large-20% or more(PV)
Scrip Dividends (pay dividend at some future date, subject to interest from the date of
declaration up to date of payment)
17. Liquidating Dividends- return of contributed capital ( Debited to APIC)
18. Fractional Share Warrants (some shareholders entitled to a fraction of share e.g. 275 x 10%=
27.50; .50 is considered as fractional dividends); Fractional Share Warrant Outstanding is the
appropriate account title for fractional dividends.
19. Allocation of Cash Dividends between Preference Shares and Ordinary Shares
20. Appropriation of Retained Earnings
21. Quasi-Reorganization (Eliminate the negative balance of RE ; RE equal to zero after Quasi-
Reorganization),
a. Increase Value of Property, Plant and Equipment -Revaluation Surplus is the account title
used to offset the deficit balance of RE after adjustments of some of the accounts.
b. Recapitalization (Change in par value or stated value), difference in the decrease of par
value should be credited to Share premium.
22. Book Value per Share
Total Stockholders Equity/Number of Outstanding Shares
23. Earnings per Share
Net Income/Ordinary Shares Outstanding