P6. TOPIC: SHAREHOLDERS EQUITY

Problem 6

East Co. issued 1,000 shares with P5 par to Howe as compensation for 1,000 hours of legal services performed. Howe usually bills P160 per hour for legal services. On the date of issuance, the share was trading on a public exchange at P140. By what amount should the share premium account increase as a result of the transaction?

Problem 7

Global Co., a real estate developer, is owned by five founding shareholders. On December 1, 2020, the entity declared a property dividend of a "one-bedroom flat" for each shareholder. The property dividend is payable on January 31, 2021. On December 1, 2020, the carrying amount of a one-bedroom flat is P1,000,000 and the fair value is P1,500,000. However, the fair value is P1,800,000 on December 31, 2020 and P1,900,000 on January 31, 2021.

Q1. What is the dividend payable on December 1, 2020?

Q2. What is the dividend payable on December 31, 2020?

Q3.What amount of gain is included in profit or loss as a result of the settlement of the property dividend on January 31, 2021?