CORPORATION EX 2

If shares are issued below par or issued value, the deficiency of the consideration received is recorded as “discount on share capital.” The discount is presented in the statement of financial position

• a. under current assets as a receivable from the shareholder concerned.

• b. as a deduction in shareholders’ equity.

• c. as an addition in shareholders’ equity.

• d. a and b

Legal capital is the portion of contributed capital that cannot be distributed to the owners during the lifetime of the corporation unless the corporation is dissolved and all of its liabilities are settled first. For no-par value shares, legal capital is

• a. the aggregate par value of shares issued and subscribed.

• b. the total consideration received or receivable from shares issued or subscribed.

• c. the aggregate stated value of shares issued and subscribed.

• d. the aggregate market value of shares issued and subscribed.

How should the excess of the subscription price over the par value of ordinary subscribed be recorded?

• a. As share premium when the subscription is received.

• b. As share premium when the subscription is collected

• c. As retained earnings when the subscription is received.

• d. As share premium when the capital stock is issued.

Share issuance costs are recognized directly in equity. If the related share premium is insufficient to offset any share issuance costs, the issuance costs are

• a. recognized as expense in profit or loss

• b. charged directly to retained earnings

• c. charged directly to share capital

• d. a or b

Zinc Co.'s adjusted trial balance at December 31, 20x1, includes the following account balances:

Ordinary shares, ₱3 par - ₱600,000

Share premium 800,000

Treasury stock, at cost 50,000

Accumulated other comprehensive income (Debit) 20,000

Retained earnings appropriated for uninsured earthquake losses 150,000

Retained earnings - unappropriated 200,000

What amount should Zinc report as total stockholders' equity in its December 31, 20x1, balance sheet?

• a. 1,680,000

• b. 1,720,000

• c. 1,780,000

• d. 1,820,000

Asp Co. was organized on January 2, 20x1, with 30,000 authorized shares of ₱10 par ordinary shares. During 20x1 the corporation had the following capital transactions:

Jan. 5 Issued 20,000 shares at ₱15 per share.

July 14 Purchased 5,000 shares at ₱17 per share.

Dec. 27 Reissued the 5,000 shares held in treasury at ₱20 per share.

Asp used the cost method to record the purchase and reissuance of the treasury shares. In its December 31, 20x1, balance sheet, what amount should Asp report as additional paid-in capital in excess of par?

• a. 100,000

• b. 125,000

• c. 140,000

• d. 115,000

On March 1, 20x1, Rya Corp. issued 1,000 shares of its ₱20 par value ordinary shares and 2,000 shares of its ₱20 par value convertible preference shares for a total of ₱80,000. At this date, Rya’s ordinary share was selling for ₱36 per share, and the convertible preference share was selling for ₱27 per share. What amount of the proceeds should be allocated to Rya’s convertible preference share?

• a. 60,000

• b. 54,000

• c. 48,000

• d. 44,000

. In 20x1, Fogg, Inc., issued ₱10 par value ordinary share for ₱25 per share. No other share transactions occurred until March 31, 20x1, when Fogg acquired some of the issued shares for ₱20 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?

• a. 20x1 profit is decreased.

• 20x1 profit is increased.

• c. Share premium is decreased.

• d. Retained earnings is increased.