Report in FinMa ^^

8/7/2019 Report in FinMa ^^

1/18

Objective of the report

To be able to discuss the statement of

shareholders equity

To be able to understand the components ofshareholders equity

To be able to understand the statement of

changes in equity


2/18

Shareholders equity

Shareholders equity formerly called Stockholders

equity

Shareholders equity represents the interest or

financial claim of the shareholders in the total asses of

the corporation after satisfying the claim of the creditor

who have priority over the assets in the event ofliquidation.

Shareholders equity is always equal to the net assets,

and can also be expressed in an equation

SHARE HOLDERS EQUITRY= ASSETS - LIABILITIES


3/18

Under Philippine Accounting Standards

(PAS) and International AccountingStandards

The term equity without any qualificationrefers to the total shareholders equity.


4/18

Authorized share capitalRepresents the total amount of

share capital the corporation is authorized to

put up or the total shares authorized to besold or issued expressed in peso.

This account is valued at par value

or stated value

Unissued share capital

Represents the share capital

not yet issued because either the

share capital is not yet sold or if

already sold is not yet fully paid hencestill unissued.

This account is valued at par

value or stated value

Authorized share

capital and unissued

share capital accountsare applicable only if

the journal entry

method is used for

recording capital

transactions


5/18

Share capital

Represents the total share capital already issued

and valued at par or stated value (the subscription is fully

paid).

This account is used under the memo entry

method


6/18

Subscriptions receivable

Represents the portion of the subscribed

share capital not yet collected

TreatmentThe Subscription Receivable account is a

deduction from Subscribed Share Capital account andthe net amount is added to the Issued Share Capital to

get the total Paid in Share Capital or Paid up Share

Capital


7/18

Additional Share Capital Accounts

These account refer to the additional capital generated by

the corporation, which may come from any of the following sources..

Share premium

Represents the excess of the subscription price of a par

value share capital over the par value

Share Capital in excess of stated value

Represents the excess of the subscription price of no parvalue share capital over stated value

Share capital from donationrepresents donation received by the corporation from

private persons or from the local or foreign government

Treasury Share premium

Represents the gain on the reissue of treasury

shares.

Share capital from retirement of

Treasury sharesRepresents the gain on retirement of treasury

shares.

Share capital from Stock Dividendrepresents the excess of the fair market value of the

share capital on the date of dividend declaration over the par

value or stated value


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Share capital from Change of par to No Par Value

Represents the difference between the par value and the stated value of

the share capital being replaced.

Share capital from Change of No Par to Par value

Represents the difference between the stated value and the par value of

the share capital being replaced.

Share capital from Reduction of Par or Stated value

Represents the difference in the original Par or Stated value and the new

par or stated value.

Share capital from Conversion of Preference into

Ordinary Share

Represents the excess of the aggregate par or stated value of the

preference shares over the par or stated value of ordinary shares.

Treatment

Additional Share Capital accounts are added to the

Paid Up Capital to arrive at the Total Contributed Capital


9/18

Stock dividends

DistributableRepresents the additional share

capital to be issued as a result of stock

dividend declaration but not yet distributed

as of the Balance sheet date.

This account will be presented below the

Total Contributed Capital

Retained Earnings

Represents the cumulativeearnings of the corporation

Unappropriated Retained Earnings

Refers to the portion of the total retained

earnings which is available for dividend distribution.

It also called Unrestricted or Free R.E

Appropriated Retained Earnings

Refers to that portion of the total retained earnings

appropriated for future contingencies or specific purposes

Treatment

Retained earnings account is added to thetotal contributed capital


10/18

Treasury shares

Represent the corporations own share capital, its

a previously issued and later acquired but not yet reissued

or retired.

This is no longer in the hands of the shareholders,

its not entitled to dividend

TreatmentIt is a deduction from the

Shareholders equity. This is the last item or

account presented in the SHE


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Revaluation Increment

Represents the excess of the

appraised value of property, plant or

equipment over the historical cost

Treatment

It is an addition to the SHE


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Shareholders equity

As of dec. 31, 2010

Share capital xx

Share premium xx

Paid in share capital xx

Additional share capital:Share capital from donation xx

Share capital from stock dividend xx xx

Total contributed share capital xx

Retained earnings:

Unappropriated xx

Appropriated for building expansion xx xx

Revaluation Increment xx

Total SHE xx


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Statement of changes in equity

A statement of changes in equity can

be created for sole proprietorships, partnerships

or corporations. Sole proprietorships and

partnerships follow a similar format for theirstatements of changes in equity, while the

corporation format is slightly different. The

purpose of the statement is to summarize the

activity in the equity accounts for the period.

All the accounts affecting the

shareholders equity will be shown in this

financial statement.


14/18

Shareholders equity

Share capital, P10 par value P250,000

Share premium 5,000Paid in share capital 255,000

Additional share capital

Share capital from donation P9,000

Share capital form stock dividend 6,000 15,000

Total contributed share capital P270,000Retained earnings

Unappropriated P280,000

Appropriated for building expansion 75,000 355,000

Revaluation Increment 25,000

Total Shareholders equity P650,000

Accounts affecting Shareholders equity

A. 5,000 additional shares were sold for cash at P11 per share

B. 30,000 cash dividend were declared

C. P60,000 of Retained earnings were appropriated for the creation of a sinking

fund

D. 1,000 treasury shares were acquired at P15/share.

E. Net income during the year was P94,000


15/18

Meow corporation

Statement of changes in Equity

Year ended Dec. 31, 2011

Share Retained

capital Reserves earnings Total

Beg balances P250k P120k P280k P650,000

Addtl. Share issued 50k 50,000

Addtl. Share Premium 5k 5,000Net income 94k 94,000

Cash dividend (30k) (30,000)

Appropriated for

sinking fund (60k) (60,000)

Treasury shares @cost (15k) (15,000)

Ending balances P285k P125k P284k P674,000

Under reserves the ff. Are includedAdditional share capital

Appropriations to RE

Revaluation Increment


16/18

Normal balances of the accounts

Authorized share capital= CREDIT (CR)

Unissued share capital= DEBIT (DR)Share capital= CREDIT (CR)

Subscribed share capital= CREDIT (CR)

Share premium

Share capital excess of stated value

Share capital from donationTreasury share premium

Share capital for retirement of treasury shares

Share capital for stock dividend

Share capital for change of par to no par

Share capital for reduction of par or stated value

Share capital for conversion of preference share capital to ordinary sharesStock dividend= CREDIT (CR)

Retained earnings= CREDIT (CR)

Revaluation Increment= CREDIT (CR)

Treasury shares= DEBIT (DR)


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18/18

Documents

Report in FinMa ^^