Question
Equity A company decided to repurchase 20% o f its ordinary shares under a buy-back scheme for $5.6 per share. At the date of the
Equity
A company decided to repurchase 20% o f its ordinary shares under a buy-back scheme for $5.6 per share. At the date of the buy-back, the equity of the company consisted of
Share capital 4 million shares fully paid $4,000,000
General reserve 600,000
Retained earnings 1,100,000
The cost of the buy-back scheme amounted to $3,500
Required:
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Prepare the journal entries to account for the buy-back. Explain the reasons for the entries made
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Assume that the buy-back price per share was equal to $0.8 per share. Prepare journal entries to record the buy-back and explain our answer
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Assume that, instead of the share capital shown above, the company had issued 1 million shares at a par value of $1 and a share premium of $3 per share. Rework your answer to (a) assuming the repurchased shares were subsequently cancelled (ignore costs of buy-back scheme)
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