1.)On January 1, 2016, Arsenic Company had ordinary and preference shares outstanding. The incorporators or original shareholders own ten ordinary shares but no preference shares. On December 31, 2016, the entity declared dividends on the ordinary shares payable on July 1, 2017. The entity decided to give the ordinary shareholders a choice between receiving a cash dividend of P500,000 per share or a property dividend in the form of a noncash asset. The noncash asset is a BSA 2102 - Intermediate Accounting 1 & 2 LEC10F - Accounting for Equity Page 2 of 2 standard model from the car fleet. Each car has a fair value of P600,000 and carrying amount of P400,000. The entity estimated that 80% of the ordinary shareholders will take the option of the cash dividend and 20% will elect for the noncash asset.

Required:

a) Prepare journal entries for 2016 and 2017 assuming the shareholders have chosen the cash alternative.

b) Prepare journal entries for 2016 and 2017 assuming the shareholders have chosen the noncash alternative and the fair value of the car did not change.

2.)

Tellurium Company showed the following balances: Share capital authorized P100 par, 50,000 shares P5,000,000 Share capital unissued, 20,000 shares 2,000,000 Subscribed share capital, 10,000 shares 1,000,000 Treasury shares (5,000 shares at cost) 600,000 Share premium 500,000 Retained earnings 1,500,000 Market value of share on declaration date P140.00 Market value of share on issuance date P150.00Antimony Company showed the following data: Share capital, par value P100, 50,000 shares issued P5,000,000 Share premium 200,000 Retained earnings 2,000,000 Market value of share on declaration date P150.00 Market value of share on distribution date P170.00