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May 7, 2016 at 5:36 pm
Why a comany gives right issue other than public issue ?
John Moffat says
May 8, 2016 at 7:49 am
It is cheaper and easier to ask existing shareholders to buy more shares then to have a public issue. (There is more as well, but not relevant until Paper F9).
May 10, 2016 at 10:27 pm
thank you sir.
May 11, 2016 at 6:42 am
You are welcome 🙂
January 22, 2016 at 3:06 pm
Just a quick question if you dont mind. Going through Kaplan’s chapter about finance structure, I see that there are more parts regarding debt issuance as well as corporation tax. Are these stuff going to be part of the exams? Non of them are explained in this video.
January 22, 2016 at 6:14 pm
What is in our lectures is what we teach on courses, and is enough to be able to pass the exam well 🙂
January 15, 2016 at 7:25 am
Apologies for asking here. I’ve posted twice a question on ASK THE TUTOR forum but so far no response. May I post it here perhaps?
January 15, 2016 at 8:01 am
Please ask in the Ask the Tutor Forum but check that you are actually submitting it.
The only question you have posted about F3 was on December 24th – it was in the normal F3 forum (not Ask the Tutor) but I did still answer it on the same day.
(You also posted a question in the F2 forum 4 months ago, and one in the technical support forum 8 months ago)
Ahmed mohamed ali says
October 19, 2015 at 8:40 pm
sir please explain how to get the right answer?
A UK private company has one million ordinary shares of £1 nominal value. Their estimated value as an investment is £2.20 each. The company wishes to raise a further £600,000 from a rights issue.
The directors decide to offer the new shares at £2.00 each to the existing shareholders and estimate that 60% of the shares offered will be bought.
Which of the following rights issues should be offered?
(a) 1 for 2
(b) 2 for 5
(c) 3 for 4
(d) 3 for 5
October 19, 2015 at 8:41 pm
Please ask this sort of question in the F3 Ask the Tutor Forum, and not as a comment on a lecture.
October 20, 2015 at 7:54 am
October 17, 2015 at 12:06 pm
ordinary share capital
5000000 shares of 25 c each 125,000
share premium account 100,000
in the year ended 30 june 20*3 the company made a rights issue of 1 share for every 2 held at $ 1 per share and this was taken up in the year the company made a bonus issue of 1 share for ever held ,using the share premium account for the purpose.
what was the companys capital structure at 30 june 20*3?
sir i didn’t understand this ques .
October 17, 2015 at 3:35 pm
It wants to know the balances on the share capital and share premium accounts at the end of the year (after the rights issue and after the bonus issue).
I go through how to do these sort of questions in the lecture.
October 18, 2015 at 4:20 pm
sir can you please do the math and explain it
October 18, 2015 at 10:53 pm
The answer is at the back of the lecture notes, and the explanations are all given in the lecture.
October 15, 2015 at 3:49 am
I have no idea about question 5, even after checking the answer from lecture note. (I feel it is quite different from example 2.)
Can you explain question 2 in detail?
October 15, 2015 at 9:11 am
I am puzzled that you want question 2 explained in detail when you say you have no idea about question 5! They are both the same principles. Have you watched the lecture in full?
vinisha ravi says
September 7, 2015 at 4:04 am
Is there a lecture for preparing basic financial statements?
September 7, 2015 at 8:15 am
Yes – the lecture that goes with chapter 3 of the lecture notes.
(But you should work through the lectures in order – they form a complete course covering everything you need to be able to pass Paper F3 well)
July 23, 2015 at 12:17 am
The question of 6Mar2014 above refers. (Ive copied the question below in case)
I was wondering about the following values of A, B & C.
SCapital Ordinary shares $ SPremium $
O.Balance 1 Jan 1,000,000 $500,000 A $300,000
First issue 1 April 200,000 $100,000 200,000 $160,000
Total shares issued 1,200,000
Bonus issue 300,000 $150,000 B ($150,000)
1,500,000 $750,000 C $ 310,000
At 1 January 2009, the capital structure of Q, a limited liability company, was as follows:
Share capital: (1,000,000 ordinary shares of 50c each) $500,000
Share premium $300,000
On 1 April 2009 the company made an issue of 200,000 50c shares at $1.30 each, and on 1 July made a bonus issue of 1 share for every 4 in issue at the time, using the share premium account for this purpose.
Which of the following correctly states the company’s share capital and share premium accounts at
Share capital Share Premium
A $750,000 $230,000
B $875,000 $285,000
C $750,000 $310,000
D $750,000 $610,000
July 23, 2015 at 12:24 am
Tables don’t really work here so well, do they ? 😉
………………………………SCapital Ordinary shares…..$………………..SPremium…..$
O.Balance 1 Jan …….1,000,000 ………………………..$500,000……A ……………….$300,000
First issue 1 April ………200,000 ………………………..$100,000……200,000……….$160,000
Total shares issued …1,200,000………………………………………………………………………………
Bonus issue ……………..300,000 ………………………..$150,000……B ……………….($150,000)
……………………………..1,500,000 ………………………..$750,000…..C……………….. $ 310,000
July 23, 2015 at 8:42 am
In future please ask questions like this in the Ask the Tutor Forum – not as a comment on a lecture.
Your answer is correct. It is C (as I also wrote before in my reply to the first time this was asked)
July 23, 2015 at 7:00 pm
My question asks to replace the letters A, B & C.
July 23, 2015 at 9:17 pm
I am sorry but I do not understand you.
The correct answer is C, so I do not know what you mean by replacing the letters! There is only ever one correct answer to multiple choice questions.
July 25, 2015 at 12:15 pm
The question is testing the ability to read a table. That table reads the following:
1. Opening balance: Capital share is 1,000,000 Ordinary shares $500,000. If Premium shares are A, valued at $300,000. What is the value of A?
2. First issue: Capital share is 200,000 Ordinary shares $100,000. Premium share is 200,000 valued at $300.000
3. Bonus issue: Capital share is 300,000 Ordinary shares $150,000. If Premium shares are B valued at $150,000. What is the value of B?
4. End Total: Capital share is now 1,500,000 Ordinary shares $750,000. If Premium shares are C valued at $310,000. What is the value of C?
So the question clearly asks, replace A, B & C in the table. I cannot put it any clearer.
July 25, 2015 at 3:52 pm
Ahhh – now I understand! My previous reply was the answer to your second question.
With regard to your first question – replacing A, B and C – I don’t know where on earth you found this question, but that column is never needed! Judging by the one figure that is given (200,000) it can only be stating the number of shares again. So A must be 1,000,000; B must be 300,000; and C must be 1,500,000.
Which again makes this extra column completely unnecessary and I cannot believe it would ever be asked for in the real exam. In the real exam questions on this topic appear in the way you have typed it under the heading ‘QUESTION’ and you have to choose the correct one of the four answers. How you do your workings for it is irrelevant because nobody looks at the workings – a computer simply marks whatever letter you have chosen as right or wrong.
June 25, 2015 at 2:54 pm
income from investment belongs to which statement?
June 25, 2015 at 2:55 pm
The Statement of profit or loss
June 25, 2015 at 4:09 pm
what kind of income may be ? Is it different from increase in capital?
June 26, 2015 at 7:53 am
It’s called investment income and appears on the Statement of profit or loss. It will therefore increase the profit, and profit increases the retained earnings which increases the equity.
It will help you to watch all of the lectures, in order.
June 4, 2015 at 11:39 am
Thank you for the good lecture, your clear explanation makes life more easier each day. Concerning question 5 answered above, I understand quite well how you did it however I am a bit confused when I read the lecture note on Bonus issue of share – the last paragraph that says ‘The total amount owing to shareholders in the Statement of Financial Position will not change, and the issue of bonus shares is generally used as a way of ‘tidying up’ the Statement of Financial Position.’ From the Q5, on 1 Sept, after the bonus issue 1 for 2, there was an increase of 50M shares, and to my understanding, this change from 100M to 150M. Kindly explain what you mean by the statement in the lecture note.
Thank you for your time on this.
June 4, 2015 at 12:02 pm
But the total owing to shareholders on the Statement is the share capital plus all the reserves.
With a bonus issue, the share capital increases but the share premium reduces, and so the total does not change.
June 4, 2015 at 10:21 pm
Oh, my mistake. I agree with you. Thank you for pointing it out. It’s much appreciated.
June 4, 2015 at 10:24 pm
And thank you for the prompt response
May 3, 2015 at 2:50 pm
Dear sir, i am not getting the right answer on question 5 Accounting For Limited Companies. The question is as follow:
At 30 June 2005 the capital and reserves of Smith, a limited liability company were:
Ordinary shares of $1 each 100
Share Premium account 80
During the year ended 30 June 2006, the following transactions took place:
1 September 2005 A bonus issue of one ordinary share for every two held, using
the share premium account.
1 January 2006 A fully subscribed rights issue of two ordinary shares for every
five held at that date, at $1.50 per share.
What would be the balances on each account be at 30 June 2006?
Share capital Share premium account
A 210 110
B 210 60
C 240 30
D 240 80
May 3, 2015 at 9:05 pm
There is no need to type out the whole question – I wrote the lecture notes and so I have a copy of the question 🙂
There is a bonus issue of 1/2 x 100M = 50M shares. So there are now 150M shares in issue, and share capital increases by 50M and share premium decreases by 50M.
There there is the rights issue of 2/5 x 150M = 60Mshares. So share capital increases by 60M and share premium increases by 60M x (1.50 – 1.00) = 30M.
So the end result is that share capital = 100 + 50 + 60 = 210M
and share premium = 80 – 50 + 30 = 60M
(as per the answer printed in the free lecture notes)
May 4, 2015 at 8:22 am
Thank you so much for your help in this question. I’ve already understood the solution of the question.
June 1, 2015 at 8:44 am
Hi, the lecturer is very short and only two things has been explained i.e how to calculate share capital and share premium. In the course notes there are lot of things like preference share, ordinary shares, dividends, reserves, bonus issue of shares etc. In lecture non of thier double entries is taught. So in the exam what the students will be asked in this topic?
June 1, 2015 at 9:05 am
Some things you have to read yourself!! There is no point in us simply reading to you.
With regard to double entries – F3 is not a double entry exam (computers can do the double entries!) – there is very little testing of debits and credits in F3.
When you have watched all of the lectures and read all of the lecture notes you will have more than enough to pass the exam well (provided, as we say throughout, that you have practiced all of the questions in your Revision Kit). If you have problems with any of the questions in your revision kit (or anything else)then you should ask in the Ask the Tutor forum and we will answer and help you within 24 hours.
March 30, 2015 at 12:55 pm
Hey John. Can you shed some light on question 4 on the test (Chap 13). I know we wont hit P/L with any dividend payments. I know immediately expense is nil. However, on the B/S why is it NIL? If we declared end of Jun 06 and our period end is Jun 06, surely we have not paid and would still be owing?
Ps: Would you prefer me to post my questions in “Ask Tutor?”
March 30, 2015 at 2:06 pm
I will answer you here, but it will be tomorrow because I am about to board a flight.
March 30, 2015 at 2:33 pm
No problem. Have a safe flight. Thanks!
March 31, 2015 at 3:08 pm
The first two dividends had already been paid.
The final dividend for year to June was not declared until August.
Therefore as at the end of June it was not ‘certain’ and therefore nothing is shown as owing in the Statement of financial position.
January 18, 2015 at 7:26 am
sir, i have solved it before but i am not able to get correct answer, pls help me, thank you.
The question is said a limited liability company, has the following trial balance at 31 december 20X9.
$1 ordinary shares=$1,000,000
1million new ordinary shares were issued at $1.50 on 1 december 20X9. The proceeds have been left in a suspense account.
income statement for the year, a statement of changes in equity, statement of financial position?
January 18, 2015 at 7:52 am
Why have you asked the same question twice?
Also, please ask questions like this in the Ask the Tutor Forum – not as a comment on a lecture.
The money received from issuing the shares should not have been credited to the suspense account. To correct it, we need to debit the suspense account and credit where it should have gone. The nominal value of the shares (1M) should be credited to the share capital account, and the premium (0.5M) should be credited to the share premium account.
The Statement of profit or loss will not be affected, but obviously the Statement of changes in equity and the Statement of financial position will show the effect of the issue.
January 18, 2015 at 6:20 am
sir, i have solved it before but i am not able to get correct answer. pls help me.Thank you
the question said a limited company has the following trial balance at 31 december 20X9.
$1 ordinary shares=$1,000,000
1 million new ordinary shares were issued at $1.50 on 1 December 20X9. The proceeds have been left in a suspense account.
Income statement for the year to 31 december 20X9?
statement of changes in equity?
statement of financial position?
December 12, 2014 at 8:28 am
I’m new here at open tuition and I greatly appreciate your lectures, they’ve been a great help to me, thank you sir. I was finding this topic really hard, but once you explained, I understood it perfectly. Thank you again sir.
December 16, 2014 at 10:39 am
Sir i did my F3 exams today and in section B the question 1 it was mainly based on shares and limited companies and i was really glad because i perfectly understood what you have taught me here. In the end i passed with 77%. thank you sir, your help is greatly appreciated:)
December 16, 2014 at 11:41 am
That is great news – many congratulations 🙂
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