SHAREHOLDERS' EQUITY DEBT SECURITIES - BONDS LIABILITIES
= also known as stockholders' equity INVESTOR ( CREDITOR ) INVESTEE ( DEBTOR)
= residual interest of owners Assets = Liabilities + Capital BONDHOLDER ISSUER/SELLER OF BONDS
= the excess of assets over liabilities = NET ASSETS
= ASSETS - LIABILITIES = CAPITAL/EQUITY/NET ASSETS INVESTMENTS (FVPL/FVOCI/FAAC) CASH
CASH BONDS PAYABLE
6 MAJOR COMPONENTS
1 SC = Share Capital EQUITY SECURITIES - SHARES SHAREHOLDERS' EQUITY
**issued and fully paid shares at the extent of par or stated value INVESTOR - SHAREHOLDER INVESTEE - ISSUER/SELLER OF SHARES
** ordinary share capital / preference share capital
2 SSC = Subscribed Share Capital INVESTMENTS (FVPL/FVOCI/UES/INV. IN ASSOC) CASH
**subscribed, thus not yet issued, may be partially paid at the extent of par or stated value CASH ORD. SHARE CAPITAL
**the balance may be reduced by the subscriptions receivables provided the
receivables are not current Subscriptions receivable Cash SHARE CAPITAL AUTHORIZED SHARE CAPITAL UNISSUED
Subscribed share capital Subscriptions receivable 30,000 1,000,000 SHARES AT 100/SHARE 970,000 SHARE
3 SP = Share Premium ISSUED MAXIMUM SHARES AT ITS PAR
** Upon ORIGINAL ISSUANCE - excess over PAR or STATED value IP > Par/stated FULLY PAID THAT A CORPORATION COULD ISSUE WITHIN ITS LIFETIME
** Upon ISSUANCE OF TREASURY SHARES - excess over COST IP > Cost AMOUNT
** Upon RETIREMENT OF TREASURY SHARES - excess PAR over COST Par > Cost 2M SHARES
** Upon DONATION of a SHAREHOLDER to the Corporation
** Upon ISSUANCE of COMPOUND FINANCIAL INSTRUMENTS NO PAR VALUE SHARES
= share premium warrants outstanding =AMOUNT PER SHARE IS UNDEFINED IN THE ARTICLES OF INCORPORATION
= share premium conversion privilege A A. NOPAR - STATED VALUE B. TRUE NO PAR
** Upon DECLARATION of SMALL share dividends Fair value > Par 5 SHARES @ STATED VALUE OF 10 PESOS 5 SHARES
**Quasi-reorganization and recapitalization
ISSUED AT 50 ISSUED AT 50
4 RE = Retained Earnings Cash (5 shares x P50) 250 Cash 250
**the cumulative balance of periodic earnings or losses Ordinary share capital (5 shares x P10) 50 Ordinary share capital 250
** also known as: Accumulated profits (losses) Share premium 200
**affected and adjusted by: C. PAR VALUE LEGAL CAPITAL
= prior period errors ISSUED 5 SHARES AT P50, PAR P10 A 250
= changes in accounting policy Cash (5 shares x P50) 250 B 250
= Net income (losses) Ordinary share capital (5 shares x P10) 50 C 50
= Dividend declaration Share premium 200
regardless whether: Cash, Property, Liability, Share dividends
** can be APPROPRIATED thru:
1. LEGAL Subcriptions receivable 10
2. CONTRACTUAL Subscribed share capital 10
3. VOLUNTARY
SHE:
5 RS = Revaluation Surplus Subscribed share capital 10
** excess Revalued amount over Carrying value of assets Less: Subscriptions receivable 10 0 **noncurrent
** most often seen in PPE transactions
SHE:
6 (TS) = Treasury Shares Subscribed share capital 10
**issued shares, reacquired but not canceled
** recorded at COST Asset:
** can only be entered to by the corporation IF there is sufficient balance Subscriptions receivable 10 **current
in the Retained earnings - unappropriated balance
year NI (NL) RE when can dividends be declared
1 10 10 yes 10
RIGHTS OF SHAREHOLDERS 2 30 40 yes 40
Ordinary Preference 3 -5 35 yes 35
1 Voting rights / x 4 -25 10 yes 10
2 Right of Pre-emption / / stock rights 5 -15 -5 deficit no
3 Right to dividends / / 6 2 -3 no
4 Right to assets / / 7 4 1 yes 1
SHAREHOLDERS' EQUITY
PRESENTATION:
1 2 3
SC Contributed capital Share Capital
SSC SC SC
SP SSC SSC
RE SP
RS (TS) Reserves:
(TS) SP
Earned Capital RE - appropriated
RE RS
RS
Retained earnings - unappropriated
(Treasury shares)
S
