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  1. In a senario case where a Pvt company issued share in exchange of office building worth of 100,000 meanwhile one member of the company said this office building was overvalued by 20,000.
    So what would be possibalaties in this scenario.
    Kindly guide.

    • I believe that this is not a question related to the lecture! Please post your non-related questions on the Ask ACCA Tutor forum in future

      As for the answer to your question … the member should not have appointed directors to the company that wish to issue $100,000 worth of shares in exchange for $80,000 worth of building

      The case Pavlides v Jensen established that the …

      “Members should have to put up with the foolish and unwise ways of those that are appointed to the office of director” but …

      … the case Daniels v Daniels took it further and said that “Whilst the members may have to put up with the foolish and unwise ways of the directors, they should not have to put up with those ways where the directors themselves benefit as a result”

      OK?

      • What $20,000 loss? The company has just acquired an asset and it has cost $100,000

        OK, maybe it’s only worth $80,000 but that’s an irrelevant observation

        If I sell you my car for $14,000 what entry will you put through your financial records? Dr TNCA Motor Vehicles $14,000 Cr Cash $14,000

        The fact that it’s only worth $10,000 is irrelevant — it’s your choice to buy or not to buy

        OK?

        Now please stop posting questions on this forum that relates to specific lectures

        This thread should have been in the Ask ACCA Tutor forum!

  5. Dear Mike,

    Regarding bonus issues and the Company is “giving” shares that are already paid: As i understand, 拢100.000 in the capital structure you wrote is a cash received as a difference between market price and nominal value of shares initially issued. The amount is reserved and cannot be used. By issuing a bonus shares that money becomes operative and can be spent by the Company since no reserves are required anymore. Is this wright?

    • Yes, both of those but also any distributable reserve like retained earnings, general reserve or plant replacement reserve.

      In order of preference the first reserve to be used would be the capital redemption reserve followed by the share premium account. After that, any of the distributable (revenue) reserves

    • I would agree with you! Have you thought about reading a study text? Or the answers to past exam questions? The notes are called “course notes” for a reason – they are the notes we use on courses. They have never been claimed to be a substitute for a study text. In fact, how could they be? Look at the font, the number of pages, the number of proper sentences / paragraphs in the course notes and compare with the study texts of household name tuition providers.

      Please, let me apologise if the notes are not comprehensive and I can interpret that you are clearly disappointed.

      And good luck next Monday 馃檪

      • I really do appreciate your efforts for helping all the ACCA students. And thanks for clearing my doubt. As I still have time to go through past papers and text for more details.

        But can you please guide me how many past papers I should go through as few of my mates were suggesting me to have a look of last 6 session papers.

        What would be your advice on it?

        Thanks

      • My advice, if you were determined to restrict yourself to just 6 past exams, would be to take the 6 starting with December 2007 and work forwards through 2008, 2009 and half way through 2010.

        Quite honestly, the more you read the answers, and the more frequently you read them, the easier the whole subject becomes

        My advice? Read, read and read again the printed solutions starting at answer 1 and working your way through a revision kit / exam kit

        As often as you can in the next 5 days

      • Get hold of a revision kit / exam kit from a reputable publisher and practice, practice, practice those mcqs and mtqs over and over and over again and again and again

        OK?

      • I will remember it lot better when you talk through it though! U make it sound really exciting Mike!
        I bore my husband to death every night when he gets in from work about cases i’ve learnt in the day! He is a builder and has no interest in it whatsoever!!! 馃檪

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