权益会计

10
Oversubscription of shares (cont.)

Accounting for oversubscription of shares partly paid - recognise aggregate applications for shares Debit Bank trust Credit Application - to allot shares as partly paid Debit Application Credit Share capital

Refer to Worked Examples 14.1 and 14.2 (pp. 442 and 443)
9
Oversubscription of shares



When more shares are applied for than the number to be issued – quite common Two approaches to manage oversubscription include 1. satisfy full demand of a certain number of subscribers and refund the funds advanced by others 2. issue shares to all subscribers on a pro rata basis - excess monies on application can either be refunded or used to reduce further monies owing on allotment Refer to Worked Example 14.3 (p. 444)

13
Oversubscription of shares (cont.)


Accounting for call made on shares subsequent to allotment To record call Debit Call Credit Share capital

To record receipt of amounts due on call Debit Cash at bank Credit Call
4
Owners’ equity as a residual claim on net assets (cont.)


The definition and recognition of equity are directly a function of the definition and recognition of assets and liabilities Total owners’ equity is made up of a number of accounts share capital relating to one or several classes of shares reserves (e.g. revaluation reserve, general reserve, forfeited share reserve) retained earnings (or accumulated losses)
8
Accounting for the issue of share capital (cont.)

To transfer cash from trust account to general operating bank account Debit Credit Cash at bank Bank trust
Topic 6
Equity
1
Learning objectives




Understand that the owners’ equity of an organisation can consist of several different accounts Understand that within owners’ equity there can be various classes of shares, each providing different rights to holders Be able to provide the journal entries to recognise the issue of both fully paid and partly paid shares by a company Be able to provide the journal entries necessary when preference shares are to be redeemed
5
Retained earnings

Retained earnings often makes up a significant proportion of shareholders’ funds represents the accumulation of prior period profits and losses reduced by dividends declared and paid reduced by any transfers to other reserves could be reduced by a bonus issue of shares changes in accounting policies as the result of the initial adoption of a new accounting standard can result in a direct adjustment in retained earnings in accordance with AASB 108 the recognition of prior period errors can result in a reduction in retained earnings in accordance with AASB 108
2
Learning objectives (cont.)




Be able to provide the necessary journal entries when shares are forfeited by their owners Be able to provide the journal entries to account for rights issues and option issues Understand what constitutes a share split and a bonus issue of shares Describe the different types of reserves that may exist.
6
Accounting for the issue of share capital





Share capital balance of owners’ equity within a company comprising the capital contributions made by owners Par value the face value of a security Share premium the difference between the issue price of a share and its par value Under section 254C of the Corporations Act 2001 shares of a company have no par value Shares no longer issued at a premium or a discount
11
Oversubscription of shares (cont.)

To recognise amount due on allotment Debit Allotment Credit Share capital To offset excess amounts paid on application against amount due on allotment Debit Credit Application Allotment
15
Different classes of shares (cs subject to preferential treatment, often with receipt of dividends or order of ranking for asset distributions some have voting rights some have voting rights if dividends unpaid others have no voting rights if participating, holders may, after receiving preference dividend at fixed rate, participate with ordinary shareholders in further profits distributed
3
Owners’ equity as a residual claim on net assets



Owners’ equity owners’ share of the business calculated by subtracting the entity’s liabilities from its assets Shareholders’ funds in a company this represents the difference between total assets and total liabilities The AASB Framework defines equity as the residual interest in the assets of the entity after deducting all of its liabilities