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Practice Question Klopp

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    • That was 600,000 dividends issued at price of $1.80 meaning there was 600,000 dividends issued at a standard price of $1 and $0.80 added as a share premium.

      Therefore, for 600,000 somebody had to pay $1,080,000 but we recognise it as $1 share price + $0.80 share premium per each individual share. Hope that makes sense.

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  6. Anyone else notice the revaluation reserve figures were wrong ? Think it should have been the revalued amount – CV for the building not historic cost? So the figure would have been £900,000 for the building + £100,000 for the land giving a total of £1,000,000 not £500,000. Or am I missing something?

    • yes there are two mistakes made by the tutor(MR CHRIS).
      1) the revaluation gain was calculated without deducting the depreciation. the right amount gain is 1000000.
      2) the dividend amount for june 2008 was calculated with taking the effect of full issue of shares. 600000 shares were issued on 1 jan 2008 ,which is half of the year. dividend declared for 2008 shud be 108000.

      • I agree that there might be a problem with the revaluation phase, but I’m not sure about the dividends part of the answer I think it is correct.

      • The dividend has been correctly accounted for because the shares at the time of declaration were 3m (2.4m +0.6m) and all of the holders are entitled to it. You don’t have to take half of the 0.6m issued because the question does not say that they’d be entitled to only half the amount. You don’t have to time apportion it either if that’s what you’re assuming because 0.04 per share is not an interest rate.

        Also please for the sake of the community make sure that you are a 100% sure before saying how a certain thing should be accounted for because all it does is create confusion when you’re saying something incorrect with so much confidence. Hope you weren’t offended but this had to be said. Goodluck!

  9. I have an issue with this question. The extracts mentioned in the question is as at 30 June 20×8. Except for the retained earnings (which is opening balance), the other two amount should be as at the Year end which would mean that it includes the issue of shares on 1 Jan 20×8. Therefore, i had to work back the equity share and the share premium to bring the balance to 30 June 20×7 for the opening balances. Correct me if I am wrong. Thanks.

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