Where options are issued at a cost, then the amount received for options not yet exercised is disclosed in the statement of financial position as an increase in equity and shown below the company’s share capital. 10. Detail the characteristics of redeemable preference shares recognised as liabilities rather than equity. Redeemable preference shares recognised as liabilities rather than equity normally would be redeemable in cash on a specified date or at the option of the holder, be cumulative in regard to the payment of dividends, non-participating in further dividends and have priority rights to return of capital
over ordinary shares. The accounting treatments of such preference shares when they are redeemed are shown the text in illustrative examples 2.9 and 2.10. 15. What is a debenture? Briefly outline the different types of debentures permitted under the Corporations Act 2001 and outline the procedures which must be followed to issue debentures. A debenture is a chose in action whereby a company undertakes to repay money borrowed by it. The chose in action may include a charge over company property to secure repayment. The different types of debentures under the Corporations Act are a mortgage debenture where the security is a first mortgage on land; a debenture where the security is over sufficient tangible property; and an unsecured note or unsecured deposit note where the first two names cannot apply. Question 2.5 Issue of shares by instalment; ledger accounts On 30 September 2016, Jacaranda Ltd issued a prospectus calling for applications for 600 000 ordinary shares at an issue price of $3, payable $1.50 on application and $1.50 on allotment. By the closing date of 31 October 2016, the company had received the following application money: From applicants for 500 000 shares From applicants for 120 000 shares $ 750 000 360 000 On 15 November, it was decided to allot to applicants who paid more than the application money the number of shares applied for, and to applicants who paid only the application money 480 000 shares. Application money was refunded to 20 000 unsuccessful applicants. The constitution gives the directors the power to apply excess application money to allotment. All other allotment money was received by 31 December 2016. Required Prepare the necessary ledger accounts to record the above transactions. JACARANDA LTD General Ledger Cash Trust 31/10/16 Application 1 110 000 15/11/16 Application 30 000 15/11/16 Cash 1 080 000 1 110 000 1 110 000
Application 15/11/16 Share Capital 900 000 31/10/16 Cash – Trust 1 110 000 15/11/16 Allotment 180 000 15/11/16 Cash Trust 30 000 1 110 000 1 110 000 Share Capital 15/11/16
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- Share capital, 1966, 1981, 1973, 1977