PROBLEM NO.

1 - Conviction Corporation

Requirement Nos. 1 to 4

Authorize
d share
capital ###
Unissued
share
capital (800,000)
Issued share capital ###
Subscribed share capita 480,000
Subscriptions receivabl (120,000) 360,000
Share premium
Premium on share ca 320,000
Gain on sale of trea 80,000
Donated capital 800,000
Stock warrants outs 200,000 ### (1)
Contributed capital ### (2)
Retained earnings
Appropriated for si 400,000
Appropriated for tr 144,000
Total appropriated 544,000 (3)
Unappropriated (P7 576,000 ###
Revaluation surplus 800,000
Net unrealized loss on available for (96,000)
Treasury shares (144,000)
Total equity ### (4)

Requirement No. 5
Issued share capital ###
Subscribed share capita 480,000
Legal capital ###
PROBLEM NO. 3 - Fortitude Company

Requirement no. 1
01/02 Share capital [50,000 ###
Share premium ###

08/30 Treasury shares 550,000

Share capital 550,000

12/01 Retained earnings 287,500

Treasury shares (2,500 s 275,000
Share premium 12,500

12/29 Retained earnings (P6 72,500

Share capital 545,000
Share dividends distribut 475,000
Share premium 142,500

Shares iss 50,000

Treasury sh (2,500)
Shares outs 47,500
Dividend ra 10%
Shares to b 4,750
Market valu 130
Total amoun 617,500
Total par v 475,000
Share prem 142,500

12/31 Retained earnings (2,5 275,000

Retained earnings appropr 275,000

Requirement no. 2
Share capital (P5,995,000-P1,000,000 ### 1
Share dividends distributable 475,000
Share premium (P1,000,000+P12,500+ ### 2
Retained earnings-appropria 275,000
Retained earnings (P3,742, ### ### 3
Treasury shares (P550,000-P275,000) (275,000)
Total equity ### 4
PROBLEM NO. 5 - Resilience Corporation

Requirement no. 1
2010 2011 2012 E 12.31.12
Unadjuste
d profit (175,000) 220,000 409,300
(loss) 454,300
Depreciati
on (15,000) (17,000) (23,000)
expense (55,000)
Miscellane
ous (20,000) (25,000) (5,000)
expense (50,000)
Land
(100,000)
write-up (100,000)
Adjusted
profit (210,000) 78,000 381,300
(loss)
249,300

Requirement no. 2
Shareholder###
Treasury sh ###
Loans recei ###
Share capital ###
Share premium – ###
Share premium – 600
Land ###
Retained earning ###

Requirement no. 3
Share capital ###
Share premium – EOP ###
Share premium – TS 600
Retained earnings ###
Treasury shares ###
Total equity ###
PROBLEM NO. 6 - Grant with a performance condition, in which the number of equity instruments varies

Year ComputationComp. Exp.Cumulative

1 80 × 200 op 106,667 106,667
2 (85 × 300 o 233,333 340,000
3 (86 × 300 o 176,000 516,000

PROBLEM NO. 7 - Cash-settled share-based payment transaction

Year Computation Expense Liability

1 405 × 100 SARs × P14. 194,400 194,400
2 400 × 100 SARs × P15. 218,933 413,333
3 253 × 100 S 47,127 460,460
150 × 100 225,000 272,127

4 113 × 100 ### 241,820

140 × 100 280,000 61,360

5 0 - P241,82 ### -
113 × 100 282,500 40,680

PROBLEM NO. 8 - Cash-settled share-based payment transaction

alternative is P50,000 (1,000 phantom shares ×

P50). Therefore, the fair value of the equity

Year ComputationExpense Equity Liability

1 Equity comp 2,533 2,533
Liability c 17,333 17,333
Total 19,866 2,533 17,333

2 Equity comp 2,533 2,533

Liability c 19,334 19,334
Total 21,867 5,066 36,667

3 Equity comp 2,534 2,534

Liability c 23,333 23,333
Total 25,867 7,600 60,000

Scenario 1: cash of P60,000 paid (60,000)

Scenario 1 t 67,600 7,600 -
Scenario 2: 1,200 shar 60,000 (60,000)
Scenario 2 t 67,600 67,600 -
PROBLEM NO. 11 - East Aurora Corporation

Computation of basic EPS:

Profit for 2012 ###
Less PS dividends:
March 31 (700,000 shares x 525,000
6/30, 9/30 & 12/31 (500,000 ### ###
Profit to OS ###
/WA outstanding OS (see below) ###
Basic EPS 1.77

Computation of WA outstanding OS:

Date Adj. shares Mos. O/S W.A
1/1/12 (3,000,000 ### 12/12 ###
4/1/12 (200,000 x 420,000 9/12 315,000
8/1/12 300,000 5/12 125,000
11/1/12 (24,000) 2/12 (4,000)
###

Computation of diluted EPS:

Profit to OS ###
Add PS dividends:
March 31 (700,000 shares x 525,000
6/30, 9/30 & 12/31 (500,000 ### ###
Profit to OS ###
/WA outstanding OS (see below) ###
Diluted EPS 1.72

Computation of WA outstanding OS:

Number of shares to compute bas ###
Convertible PS still outstanding ( ###
Convertible PS converted (200,000 105,000
Number of shares to compute dil ###
PROBLEM NO. 13 - Jerely Corporation

Requirement No. 1
Ordinary shares outsta 79,920
Shares issued 2/1/12 2,200
82,120
Share split, x 2
164,240
Treasury shares acquir (1,000)
Ordinary shares outsta 163,240
x Dividend per share 4
Dividends paid to ordi 652,960

Requirement No. 2
Retained earnings, 12/ ###
Profit for 2012 991,520
Dividends - ordinary (s (652,960)
Dividends - preference (39,600)
Retained earnings, 12/ ###

Requirement No. 3
Total equity, 12/31/11 ###
Add (deduct) 2012 transactions:
2/1 - Issuance of O 66,000
5/1 - Issuance of P 76,800
5/31 - share split -
9/1 - Acquisition of (18,000)
10/1 - PS dividend ( (39,600)
- OS dividend (652,960)
11/1 - Re-issuance 22,000
Profit for 2012 991,520
Total equity, 12/31/12 ###

Requirement No. 4
Profit for 2011 ###
Less PS dividend (270 32,400
Profit to OS ###
Divide by weighted av 153,360
Basic earnings per sha 8.56

Computation of weighted average number of OS

Adjusted sharesFraction Total
Jan. 1 (65,0 140,400 12/12 140,400
May 1 (9,00 19,440 8/12 12,960
Total 153,360
*Share dividend, 7.31.11
**2-for-1 share split, 5.31.12

Requirement No. 5
Profit for 2012 991,520
Less PS dividend (P33 39,600
Profit to OS 951,920
Divide by weighted av 163,707
Basic earnings per sha 5.81

Computation of weighted average number of OS

Adjusted sharesFraction Total
Jan. 1 (79 159,840 12/12 159,840
Feb. 1 (2,20 4,400 11/12 4,033
Sept. 1 (1,000) 4/12 (333)
Nov. 1 1,000 2/12 167
Total 163,707
*2-for-1 share split, 5.31.12
PROBLEM NO. 14 - Theory

1A
2A
3D
4B
5B
6C
7D
8A
9D
10 A