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  1. avatar says

    A bit of help with this please….exam tomorrow!!!!
    Thanks!!

    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

    • Avatar of johnmoffat says

      (it is better to ask this sort of question on the F3 Ask ACCA Tutor forum – I cannot always read every comments below lectures)

      When the first issue of made, the share capital will increase by $100,000 (200,000 x 50c) and the share premium will increase by $160,000 (200,000 x (1.30 – 0.50))

      When the bonus issue is made, they will issue 300,000 shares ((1M at the start + 200,000 issued in April) / 4). Share capital will increase by $150,000 (300,000 x $0.50) and share premium will decrease by the same amount ($150,000)

  2. avatar says

    open assets = 569400
    liability= 412840
    capital introduce= 65 000
    X paid for himself wages of = 800$ per month.

    closing assets- 614,130
    liability 369770

    year end is 31-December 20X8

    calculate profit.

    i know this question seems easy.i have solved it before but for some reason atm i am not able to get correct answer :s

    • Avatar of johnmoffat says

      Increase in net assets = capital introduced + profit – drawings

      Increase in NA’s = (614130 – 369770) – (569400 – 412840) = 87800
      Capital introduced = 65000
      Drawings = 12 x 800 = 9600

      So…..87800 = 65000 + profit – 9600
      Profit = 87800 – 65000 + 9600 = 32400

  3. avatar says

    Is it the called-up Shares paid ONLY that will be accounted for under equity?
    also I recall reading that dividend paid and declared is taken to the statement of Comprehensive income
    and dividend declared only to the statement of Financial Position, is this so?

    • Avatar of johnmoffat says

      Equity is the called up share capital.

      Dividends paid or declared are shown in the Statement of Changes in Equity.
      Dividends are only shown as owing in the Statement of Financial Position if they have been declared but not yet paid.

  4. avatar says

    Dear Sir,
    I would like to get your thoughts on something.
    A private limited liability company was bought over, how will the accounting be done?
    Will the new owner account for it as a new company? revaluation of the assets, etc
    Or will it be accounted for as a going concern?
    Will the company be taxed as an existing company that has been in operation or as a new business?

    Thanks for your response.

    • Avatar of johnmoffat says

      You are just expected to know what appears in the Statement of Change in Equity.
      Especially the fact that dividends do not appear in the Income Statement or the Statement of Financial Position – they only appear in the Statement of Changes in Equity.

  5. avatar says

    Dear Great Provider,
    I am very pleased to find your website and great lectures ofcourse. BUT Here my problem is:
    None of any chapter appeared to me as hard as I suffered this one. I dont know why I cant learn the theory and unfortunately on this topic your video duration is very short but I still agree that your notes are brilliant but as per my problem as I stated :(

    Kindly advice me.

    Many Thanks

    • Avatar of johnmoffat says

      The only real ‘numbers’ bit is dealing with rights issues and bonus issues. Otherwise it is mainly terminology.

      I suggest that you read through the course notes again and watch the lectures again (and read the relevant chapter in any study text you might have).

      I am sure you will still have some problems, so then ask me on here about any specific areas that are causing difficulties and I will try and help you.

      • avatar says

        Dear John,
        I have passed the exam and ofcourse this topic was most dominant in the exam. I saw your other videos like on consolidation etc that regards to limited liability companies and I was done with all the logic almost.

        I pay thanks to you again. This day was lucky for me -30th july :)

        I didn’t read the bpp or kaplna. Because it was not needed any more to swell eyes on reading the things without getting logics. However the interpretation topic was left but I covered it while I was driving car by reading your course notes.

        I am looking forward to use your knowledge for the rest of acca.

        Many Thanks

  6. avatar says

    Goodnight to everyone.

    Chapter 13 Test Q#2 .
    Looking at the answer at the back of the book. I undertake up $225,000: I dont understand why 500, 000 is multiplied by ,75. Can any shed some light

    • Avatar of johnmoffat says

      The shares have a nominal value of $0.25, and so this is the amount that goes to share capital.
      However, they were sold at $1 each, and so the extra $0.75 goes to the share premium account.

    • Avatar of johnmoffat says

      (all the figures below are in millions!)

      First they have a 1 for 2 bonus issue. As there are currently 100 shares in issue, this means that they issue another 50 shares (so the total number of shares is now 150).
      Since they are $1 shares, the share capital increases by the nominal value of 50 to a total of 150. Because it is a bonus issue, the share premium reduces by 50 to 30.

      Then they have a 2 for 5 rights issue. As there are 150 shares in issue after the bonus, this means that they issue another 2/5 x 150 = 60 shares.
      The share capital increased by the nominal value of 60 to a total of 210.
      The share premium increases by the excess of the amount paid above the nominal value – i.e. 60 shares at 0.50 = 30. The balance was 30 after the bonus issue so it increases by another 30 to a total of 60.

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