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ACCOUNTING
(PART 3)
ACCTBA2
TREASURY SHARES
****
(Unit 7)
Treasury shares
refers to the
equity shares
owned by the
issuing
corporation that
have been issued
and then
reacquired but
not cancelled.
These are
generally
stated at their
cost of
acquisition and
as a reduction
of shareholders
equity.
When a company
reacquired its
own shares and
these shares are
not cancelled, the
accumulated
profits must be
appropriated
equivalent to the
cost of the said
shares.
1. ACQUISITION
2. REISSUANCE, and
3. RETIREMENT.
When a
corporation
acquired its own
shares from its
shareholders by
mode of donation,
such transaction
is called Share
Capital Donation
or Stock Donation
Date of donation
there is no entry,
but the receipt of
donated share is to
be recorded in a
memorandum entry
in the ledger.
Treasury Share
Received from
stockholders 1,000 shares
at par value of P50.
CASH
XX
Donated Capital
XX
ACCUMULATED PROFITS,
APPROPRIATIONS &
DIVIDENDS
UNIT 8
ACCUMULATED PROFITS
CLASSIFICATION OF
ACCUMULATED PROFITS
UNAPPROPRIATED
ACCUMULATED
PROFITS
APPROPRIATION
RESERVE
APPROPRIATION RESERVE
ACCOUNTING FOR
ACCUMULATED PROFITS
DEBIT
CREDIT
1) Overstatement (prior period
5) Understatement (prior perio
adjustments or effect of change
adjustments
in
or effect of chang
accounting policy).
in accounting policy).
2) Closing of income summary
6) with
Closing of income summary
debit balance.
with credit balance.
3) Declaration of dividends.
4) Appropriation for specific purpose.
7) Reversal of appropriations.
DECREASES
INCREASES
ACCOUNTING FOR
DIVIDENDS
***
FORMS OF
DIVIDENDS
1. CASH DIVIDEND
2. PROPERTY
DIVIDEND
3. SHARE CAPITAL
DIVIDEND
ACCOUNTING METHODS TO
RECORD SHARE DIVIDENDS
SMALL less than 20%
CASH DIVIDENDS
***
DIVIDENDS RIGHTS OF
PREFERENCE SHARE
The apportionment of any cash dividend
declared between the ordinary and
preference shareholders will depend on
the dividend right of the preference share.
The preference may have the following
dividend rights:
1. Cumulative preference share
2. Participating preference share
PREFERENCE SHARES
1.
2.
3.
4.