《权益会计培训指导PPT.ppt》由会员分享，可在线阅读，更多相关《权益会计培训指导PPT.ppt（42页珍藏版）》请在三一办公上搜索。
1、1,Topic 6,Equity,2,Learning objectives,Understand that the owners equity of an organisation can consist of several different accountsUnderstand that within owners equity there can be various classes of shares,each providing different rights to holdersBe able to provide the journal entries to recogni
2、se the issue of both fully paid and partly paid shares by a companyBe able to provide the journal entries necessary when preference shares are to be redeemed,3,Learning objectives(cont.),Be able to provide the necessary journal entries when shares are forfeited by their ownersBe able to provide the
3、journal entries to account for rights issues and option issuesUnderstand what constitutes a share split and a bonus issue of sharesDescribe the different types of reserves that may exist.,4,Owners equity as a residual claim on net assets,Owners equityowners share of the business calculated by subtra
4、cting the entitys liabilities from its assetsShareholders fundsin a company this represents the difference between total assets and total liabilitiesThe AASB Framework defines equity asthe residual interest in the assets of the entity after deducting all of its liabilities,5,Owners equity as a resid
5、ual claim on net assets(cont.),The definition and recognition of equity are directly a function of the definition and recognition of assets and liabilitiesTotal owners equity is made up of a number of accountsshare capital relating to one or several classes of sharesreserves(e.g.revaluation reserve,
6、general reserve,forfeited share reserve)retained earnings(or accumulated losses),6,Retained earnings,Retained earnings often makes up a significant proportion of shareholders fundsrepresents the accumulation of prior period profits and lossesreduced by dividends declared and paidreduced by any trans
7、fers to other reservescould be reduced by a bonus issue of shareschanges 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 108the recognition of prior period errors can result in a
8、reduction in retained earnings in accordance with AASB 108,7,Accounting for the issue of share capital,Share capitalbalance of owners equity within a company comprising the capital contributions made by ownersPar valuethe face value of a securityShare premiumthe difference between the issue price of
9、 a share and its par valueUnder section 254C of the Corporations Act 2001 shares of a company have no par valueShares no longer issued at a premium or a discount,8,Accounting for the issue of share capital(cont.),To recognise receipt of application moniesDebitBank trustCreditApplicationTo recognise
10、the issue of shares and to close application accountDebitApplicationCreditShare capital,9,Accounting for the issue of share capital(cont.),To transfer cash from trust account to general operating bank accountDebitCash at bankCreditBank trustRefer to Worked Examples 14.1 and 14.2(pp.442 and 443),10,O
11、versubscription of shares,When more shares are applied for than the number to be issued quite commonTwo approaches to manage oversubscription includesatisfy full demand of a certain number of subscribers and refund the funds advanced by othersissue shares to all subscribers on a pro rata basis-exces
12、s monies on application can either be refunded or used to reduce further monies owing on allotmentRefer to Worked Example 14.3(p.444),11,Oversubscription of shares(cont.),Accounting for oversubscription of shares partly paid-recognise aggregate applications for sharesDebitBank trust CreditApplicatio
13、n-to allot shares as partly paidDebitApplication CreditShare capital,12,Oversubscription of shares(cont.),To recognise amount due on allotmentDebitAllotmentCreditShare capitalTo offset excess amounts paid on application against amount due on allotmentDebitApplicationCreditAllotment,13,Oversubscripti
14、on of shares(cont.),To transfer funds to operating bank accountDebitCash at bankCreditBank trustTo recognise receipt of amounts due on allotmentDebitCash at bankCreditAllotment,14,Oversubscription of shares(cont.),Accounting for call made on shares subsequent to allotmentTo record callDebitCallCredi
15、t Share capitalTo record receipt of amounts due on callDebitCash at bankCreditCall,15,Different classes of shares,Ordinary sharesprovide a claim against the entity that ranks behind the claims of creditors and some preference shareholdersconfer voting rights on shareholdersentitle their owners to di
16、stribution of profits in the form of dividendsentail,however,no guarantee of dividendsif dividends not paid in one year,do not accrue the right to dividends until dividends are paid,16,Different classes of shares(cont.),Preference sharessubject to preferential treatment,often with receipt of dividen
17、ds or order of ranking for asset distributionssome have voting rights some have voting rights if dividends unpaid others have no voting rightsif participating,holders may,after receiving preference dividend at fixed rate,participate with ordinary shareholders in further profits distributed,17,Differ
18、ent classes of shares(cont.),Preference shares(cont.)if convertible,have a right of conversion to ordinary sharesif redeemable,have the ability to redeem shares for cash at later datesome have the characteristics of equity and others have the characteristics of debtpreference shares that are redeema
19、ble on a fixed date,or at the option of the shareholder,provide a fixed rate of return,and provide no voting rights,should be disclosed as debt(AASB 132)if disclosed as debt then the dividend payments will be classified as treated as expenses(interest),18,Redemption of preference shares,Under sectio
20、ns 254(J)and(K)of the Corporations Act shares are to be redeemedout of profits that would otherwise be available for dividends;or out of proceeds of a fresh issue of shares made for the purposes of the redemptionRefer to Worked Example 14.7(p.450 and 451),19,Redemption of preference shares(cont.),To
21、 recognise issue of preference sharesDebitCash at bankCreditShare capitalpreference sharesTo eliminate preference shares and create capital redemption reserveDebitShare capitalpreference sharesCreditCapital redemption reserve,20,Redemption of preference shares(cont.),To redeem shares out of profitsD
22、ebitRetained earningsCreditCashFurther entry required pursuant to amendments to the Corporations LawDebitCapital redemption reserveCreditShare capital,21,Forfeited shares,Shares can be forfeited ifshares are issued as partly paid and shareholders do not subsequently pay the amounts due on allotment
23、or on callsa shareholder ceases to be a member of the company at that timeShareholders who have forfeited shares might be entitled to a full or partial refund of monies paid before forfeiture,22,Forfeited shares(cont.),Various outcomesif company is listed on the ASX or if companys operating rules al
24、low it,a refund is paid to the investor less costs incurred in reissuing sharesamounts paid are recorded in a forfeited shares account(liability)until refunded,23,Forfeited shares(cont.),If company is not listed on the ASX and constitution says nothing about refunds,company can retain the amounts pa
25、id less costs of reissuing shares-amounts paid are held in a forfeited shares reserve(part of shareholders funds)Refer to Worked Example 14.8(p.452),24,Forfeited shares(cont.),To record the callDebitCallCreditShare capitalTo record receipt of call moniesDebitCash at bankCreditCall,25,Forfeited share
26、s(cont.),To record forfeiture of sharesDebitShare capitalCredit CallCreditForfeited shares accountTo recognise amount received on sale of forfeited shares:DebitCash at bankDebitForfeited shares accountCreditShare capital,26,Forfeited shares(cont.),To recognise payment of costs relating to sale of sh
27、aresDebit Forfeited shares accountCreditCash at bankTo recognise return of remaining monies to original shareholdersDebitForfeited shares accountCreditCash at bank,27,Share splits and bonus issues,Share splitssubdivision of the companys shares into shares of smaller valueresult in no change to owner
28、s equitycompanies may undertake share splits because they feel that lower priced shares will be more marketableno journal entries requiredcompany must amend share register,28,Share splits and bonus issues(cont.),Bonus sharesexisting shareholders receive additional shares,at no cost,in proportion to
29、their shareholding at the date of the bonus issuejournal entryDebitRetained earningsCreditShare capitalordinary sharesbonus shares from retained profits often referred to as a bonus share dividend,29,Rights Issues and Share Options,A rights issue provides existing shareholders with the right to acqu
30、ire additional shares typically at an attractive priceSome rights might be tradeable,some are notSee Worked Example 14.9(p.454)Share options give the holder the right to acquire shares in the future at a particular priceAre typically sold by the entity,or provided to employees as part of their salar
31、ySee Worked Example 14.10(p.456),30,Required disclosures for share capital,AASB 101 requires disclosure of the followingFor each class of share capitalnumber of shares authorisednumber of shares issued and fully paid,and issued but not fully paidpar value per share,or that shares have no par valuere
32、conciliation of number of shares outstanding at beginning and end of periodrights,preferences and restrictions of the class,31,Required disclosures for share capital(cont.),shares reserved for issue under options and contracts for sale of sharesshares in the entity held by the entity or by subsidiar
33、ies or associatesDescription of nature and purpose of each reserve within equity,32,Summary,The chapter addresses various issues associated with share capital and reservesOwners equity is the residual interest in the assets of an entity after deduction of its liabilitiesWhen shares are issued to the
34、 public,funds must be placed in trust prior to allotment of sharesPreference shares should be disclosed as debt or equity depending on the conditions of issueForfeiture of shares,share splits and bonus issues were also discussed,33,Issue of shares Payable in full on application(Example 1),ABC issued
35、 a prospectus for the issue of 100,000$5 shares on 1 January 2007.The prospectus specified that the$5 was payable in full on application.The company received applications for a total of 100,000 shares these applications were received throughout the month of January.On 31 January 2007 ABC issued 100,
36、000 shares.Share issue costs of$1,500 were incurred by ABC.Required:Prepare the journal entries to account for the issue of shares by ABC.,34,Issue of shares Payable in full on application(Example 1),1-30 January 2007DrCash trust500,000CrApplication500,000To record receipt of application monies prio
37、r to issuing the sharesCash account trust is used to record cash prior to the shares being issued the cash is held in a trust account on behalf of the applicants,35,Issue of shares Payable in full on application(Example 1),31 January 2007DrApplication500,000CrShare capital500,000Issue of shares appl
38、ied forDrCash500,000CrCash trust500,000Transfer from cash trust on issue of sharesDrShare capital1,500CrCash1,500To record share issue costsShare issue costs are not expensed,but offset against the proceeds of the equity issue in accordance with AASB 123,36,Issue of shares Deposit on application,bal
39、ance on allotment(Example 2),ABC issued a prospectus for the issue of 100,000$5 shares on 1 January 2007.The prospectus specified that$3 was payable on application,with the balance payable on allotment.The company received applications for a total of 120,000 shares these applications were received t
40、hroughout the month of January.The Directors decided to issue 5 shares for every 6 applied for,refunding the money in relation to unsuccessful applications.On 31 January 2007 ABC issued 100,000 shares.Required:Prepare the journal entries to account for the issue of shares and the subsequent receipt
41、of allotment monies.,37,Issue of shares Deposit on application,balance on allotment(Example 2),January 2007DrCash trust360,000CrApplication360,000To record receipt of application monies prior to issuing the shares31 January 2007DrApplication300,000Dr Allotment200,000Cr Share capital500 000,38,Issue
42、of shares Deposit on application,balance on allotment(Example 2),31 January 2007DrApplication60,000CrCash trust60,000Refund of application monies to unsuccessful applicantsDrCash300,000CrCash trust300,000Transfer from cash trust on issue of sharesDrCash200,000CrAllotment200,000Cash received on allot
43、ment,39,Oversubscription(Example 3),ABC issued a prospectus for 100,000$5 shares on 1 January 2007.The prospectus required payment of$3 on application and$2 in one years time.The company received applications for a total of 125,000 shares these applications were received throughout the month of Janu
44、ary.On 31 January 2007 ABC issued 100,000 shares.Required:Prepare the journal entries to account for the issue of shares assuming the excess money was offset against the call due in one years time.,40,Oversubscription(Example 3),1-30 January 2007DrCash trust375,000CrApplication375,000To record recei
45、pt of application monies prior to issuing the shares31 January 2007DrApplication375,000CrCalls in advance 75,000CrShare capital300,000Issue of shares applied for and transfer of excess to calls in advance accountDrCash375,000CrCash trust375,000Transfer from cash trust on issue of shares,41,Forfeitur
46、e of shares(Example),This example continues on from previous example.On 1 July 2007 the directors of ABC decided to forfeit the 10,000 shares in respect of which the call of$1.25 was not made.The shares were cancelled and reissued as fully paid to$5 per share on payment of$4 per share.Costs of$500 w
47、ere incurred to reissue the shares.Required:Prepare the journal entries to account for the forfeiture and re issue of the 10,000 shares.,42,Forfeiture of shares(Example),July 2007DrShare capital50,000CrCall 12,500CrForfeited shares a/c 37,500Cancel of forfeited sharesDrCash 40,000DrForfeited shares
48、a/c 10,000CrShare capital 50,000Re-issue of forfeited shares for$4 per shareDrForfeited shares a/c 500CrCash 500Costs incurred to reissue sharesDr Forfeited shares account 27,000Cr Cash 27,000Refund of balance to forfeiting shareholders,(10,000 x$5),(10,000 x$1.25),(10,000 x$3.75),Discount of$1/share,37,500 10,000-500,
