Apr 15, 2024 acc

• SHARE CAPITAL reflects the amount of resources  received by the corporation  as a result of investment by  stockholders, donation and or other  capital stock transactions.
• RETAINED EARNINGS is the amount of capital  accumulated and retained through the profitable operations of the business
• Net worth equals total assets minus total debts
• SHARE CAPITAL OR CAPITAL STOCK– is the portion of a corporation’s equity that has been obtained by the issue of shares of the company to a  shareholder and paid by them in money, property or services
• Legal capital - Øthat portion of owners’ equity and assets that cannot be distributed , and is therefore permanent in nature.
• LEGAL CAPITAL -refers to the amount equal to the aggregate  number of all issued and subscribed par value shares multiplied by par value.
• legal capital - Øit cannot be allowed to leave the business and distributed through a DIVIDEND or   any other means.
• share premium - Øthe credited difference in price between the par value , face value of shares and the total price a company received for recently issued shares.
• share premium - Øa statutory reserve account and therefore non-distributable , unless such move is stated in the company’s by-laws.
• FAIR MARKET VALUE -the estimated amount that a willing seller would receive from a financially capable buyer for the sale or exchange of the asset in a free market.
• If a stock is issued for non-cash considerations such as properties or intangibles, the valuation basis would be fair market value of property, fair market value of stocks issued, and par or stated value of capital stock, in order of priority
• Share subscriptions is a binding subscription contract
• Subscription Receivable  is a Stockholder’s Equity account.
• If it is collectible within a year, this may be shown in the statement of financial position  as current asset.
• subscription receivable - §It is represented in the equity section of the Balance Sheet as a deduction from related Subscribed Capital Stock.
• —In this case , the delinquent shares shall be sold in public auction  for the account of the delinquent  shares to the highest bidder.
• HIGHEST  BIDDER

  Øis a person who is willing to pay the full amount of the “offer price” plus accrued interest, cost of ads and other expenses related to auction sale in exchange for the smallest number  of shares.
• —When a subscriber  fails to settle the subscriptions in full on the date specified in the subscription contract or in the call made by the BOD, then the shares shall be declared delinquent shares.
• ØIf there is NO BIDDER, then the corporation may bid for the delinquent shares .  Shares acquired under this circumstances are considered Treasury Shares.
• §FAIR VALUE- the amount for which an asset can be exchanged , liability settled, or an equity instrument granted could be exchanged between knowledgeable willing parties at an arm’s length transaction.
• §ORGANIZATION EXPENSE – an expense account used for services in connection with incorporation.
• §SHARE/ STOCK OPTION-a right to buy a particular amount of ordinary shares at a fixed price at a future date over a certain period of time.
• §EXERCISE PRICE-price which an underlying asset can be purchased or sold when trading a call or put option.
• §CALL PRICE-price at which the issuer of a share can redeem a callable preferred share or a bond. Known also as redemption price.
• §GRANT DATE- the date at which the entity and another party (including employees) agree to a share-based payment arrangement.
• §VESTING CONDITIONS- means condition or restriction that determine  whether the entity receives the services that entitle the counterparty to receive cash or equity instruments  of the entity under a share-based payment arrangement.
• §VESTING PERIOD – the period which all the specified vesting conditions of a share-based arrangement are to be satisfied.
• VEST - means become an entitlement. The vesting date is when the cash and equity instruments granted vest.
• With performance conditions, measurement is based  at the lowest aggregate fair value.
• §RATIONALE: to motivate employees beyond their regular cash based compensation (Salaries and bonus) and to align their interests with those of the company
• §Shares issued to employees are usually subject to a vesting period before they can be sold.
• Donated capital - ØRefers to Assets, Shares, Contributions given to a Corporation as a gift.
• callable preference shares - ØDefined as a variety of shares that may be redeemed by the issuer at a set value before maturity date.
• Redeemable preferred stock, also known as callable preference share, is a popular means of financing for large companies, combining the elements of equity and debt financing.
• •The amount paid to call and retire a preference share is its “call price”.
• •Redemption date is not definite for it is dependent on the corporation exercising its CALL.
• CONVERTIBLE PREFERENCE SHARE - ØRefers to preference share which carries or include an option for the holder to exchange to a fixed number of  ordinary shares or a fixed conversion ratio after a predetermined date.
• ØThe primary events producing this action are conversions (exchange transaction or reclassification) and recapitalization  ( change in the capital structure of the firm)
• WATERED STOCK  shares of a company that are issued at a much  greater value than its underlying assets usually to defraud investors which creates artificially inflated value.
• Corporation Code of the Phils, Sec 65 - The conversion is not automatic as it would require an amendment to the Articles of Incorporation to avoid watering of stocks