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What is the minimum amount of paid-in capital that must remain in the corporation for the protection of corporate creditors?
What is the minimum amount of paid-in capital that must remain in the corporation for the protection of corporate creditors?
- Authorized capital
- Legal capital (correct)
- Subscribed capital
- Issued capital
What is the term for the portion of paid-in capital representing amounts paid by shareholders in excess of par value?
What is the term for the portion of paid-in capital representing amounts paid by shareholders in excess of par value?
- Authorized shares
- Share premium (correct)
- Treasury shares
- Subscribed shares
What type of share gives its owners certain advantages over ordinary shareholders?
What type of share gives its owners certain advantages over ordinary shareholders?
- Authorized share
- Ordinary share
- Preference share (correct)
- Subscribed share
What represents the interest or right of a shareholder in a corporation and is evidenced by a certificate of stock?
What represents the interest or right of a shareholder in a corporation and is evidenced by a certificate of stock?
What is the capital contributed by shareholders from the sale of shares of stock?
What is the capital contributed by shareholders from the sale of shares of stock?
What type of shares must be issued when only one class of share is issued?
What type of shares must be issued when only one class of share is issued?
What is the maximum number of shares a corporation can issue as specified in the Article of Incorporation?
What is the maximum number of shares a corporation can issue as specified in the Article of Incorporation?
What is the amount of shares that have been sold and paid for in full, including treasury shares?
What is the amount of shares that have been sold and paid for in full, including treasury shares?
What is the portion of the authorized share capital that has been subscribed but not yet fully paid?
What is the portion of the authorized share capital that has been subscribed but not yet fully paid?
What is the total amount of shares that can be issued by the corporation, given a par value of Php 5.00?
What is the total amount of shares that can be issued by the corporation, given a par value of Php 5.00?
When are issued shares debited?
When are issued shares debited?
What is the total amount of shares that have been sold and paid for in full, given a par value of Php 5.00?
What is the total amount of shares that have been sold and paid for in full, given a par value of Php 5.00?
What is the result of subtracting Treasury Share Capital from Issued Share Capital?
What is the result of subtracting Treasury Share Capital from Issued Share Capital?
What type of shares are acquired by the corporation but not retired, awaiting re-issuance?
What type of shares are acquired by the corporation but not retired, awaiting re-issuance?
What is the Par Value of the Preferred Shares?
What is the Par Value of the Preferred Shares?
What is Subscriptions Receivable classified as?
What is Subscriptions Receivable classified as?
What is the total number of authorized ordinary shares?
What is the total number of authorized ordinary shares?
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Study Notes
Share Capital
- Authorized Share Capital: the maximum number of shares a corporation can issue, specified in the Article of Incorporation.
- Authorized Share Capital = Maximum Authorized Shares * Par Value per share.
- Example: Authorized Share Capital = Php 30,000,000,000.00 (Maximum No. of Shares: Ordinary 3,790,000,000, Preferred 2,210,000,000, Par Value: Php 5.00).
Issued Share Capital
- Refers to shares that have been sold and paid for in full.
- Includes treasury shares.
- Share capital is credited for the total par value of fully collected subscriptions.
- Share capital is debited when issued shares are retired, redeemed, or cancelled by the corporation.
- Example: Issued Share Capital = Php 15,000,000,000.00 (Maximum No. of Shares: Ordinary 1,895,000,000, Preferred 1,105,000,000, Par Value: Php 5.00).
Subscribed Share Capital
- The portion of authorized share capital that has been subscribed but not yet fully paid.
- Example: Subscribed Share Capital = Php 5,000,000,000.00 (Maximum No. of Shares: Ordinary 600,000,000, Preferred 400,000,000, Par Value: Php 5.00).
Legal Capital
- The portion of contributed capital that must remain in the corporation for the protection of corporate creditors.
- In par value shares, Legal Capital (LC) = the aggregate par value of all issued and subscribed shares.
- In no-par value shares, LC = total consideration received by the corporation for the issuance of its shares.
Share Premium (Additional Paid-in Capital)
- The portion of paid-in capital representing amounts paid by shareholders in excess of par value.
Types of Shares
- Ordinary Share: represents the basic ownership class of the corporation, residual equity.
- Preference Share: gives its owners certain advantages over ordinary shareholders, special benefits include priority to receive dividends and assets in liquidation.
Outstanding Share Capital
- Issued shares which are in the hands of the shareholders.
- OSC = Issued Share Capital (Issued Shares) - Treasury Share Capital (Treasury Shares).
- Example: Outstanding Share Capital = Php 14,895,000,000.00.
Treasury Stock
- Issued shares acquired by the corporation but not retired and are therefore awaiting to be re-issued at a later date.
Subscription of Shares
- Subscriptions Receivable is a shareholder's equity account.
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