At this date, the ordinary share was selling for P100 pershare and the preference share was selling for P150 pershare.7.What amount of the proceeds should be allocated tothe preference shares?a.P2,000,000c.P1,875,000b.P2,500,000d.P3,000,0008.What amount of the proceeds should be allocated tothe preference shares, if the shares are redeemable atthe option of the holder after 5 years?a.P2,000,000c.P1,875,000b.P2,500,000d.P3,000,0009.On December 31, 2010, Palau Company issued200,000 shares of P100 par, 10% cumulativepreference shares for P25,000,000.One detachablewarrant was attached to each preference share issued.Each warrant gives the holder the right to purchaseone ordinary share, P50 par value, for P100.Themarket value of the warrant after the preferenceshares were issued was P15.The warrants expire onDecember 31, 2011.The proceeds to be allocated tothe preference shares on December 31, 2010 isa.P25,000,000c.P21,000,000b.P22,000,000d.P20,000,00010. Entity B issued (written) a call option that gives theholder the right to purchase 10,000 shares of theentity for a fixed price of P100 per share.If theproceeds from issuing the call option is P90,000, theentity’s equity should increase bya.P1,000,000c.P90,000b.P1,090,000d.P011. Entity C purchased a call option that gives the entitythe right to repurchase 1,000 shares of the entity for afixed price of P100 per share.If the price forpurchasing the call option is P9,000, the entity’s equityshould decrease bya.P100,000c.P9,000b.P190,000d.P012. On January 1, 2010, Entity D enters into a forwardcontract that requires the entity to repurchase 1,000shares for P60,000 on December 31, 2010.Noconsideration is paid or received at the inception of thecontract.The market interest rate is 10% on January1, 2010 and 12% on December 31, 2010.The forwardcontract decreased Entity D’s equity on January 1,2010 bya.P60,000c.P53,574b.P54,546d.P0- now do the DIY drill -DO-IT-YOURSELF (DIY) DRILL1.The equity section of Buffett Company revealed thefollowing information on December 31, 2010:Preference share capital, P100 parP5,000,000Share premium-preference shares2,000,000Ordinary share capital, P503,200,000Share premium-ordinary shares500,000Subscribed ordinary share capital800,000Retained earnings-appropriated250,000Unrealized loss on available for salesecurities600,000Subscription receivable-ordinaryshares400,000Retained earnings- unappropriated3,500,000Treasury shares-ordinary1,000,000How much is the contributed capital of BuffettCompany as of December 31, 2010?a.P10,100,000c.P11,100,000b.P11,500,000d.P10,500,0002.On July 1, 2009, the Beauty Corporation wasregistered with the SEC.Its authorized share capitalconsists of 100,000 ordinary shares with par valueP20.00 per share.On July 15, 2009, it issued 10,000 shares at P23 pershare.On October 15, 2009, the Beauty Corp. paid tothe majority shareholder the sum of P80,000 for acertain parcel of land; and issued 5,000 ordinaryshares for the building on the land.The land wasappraised at P130,000.The building has a cost ofP150,000 and its depreciated value is P90,000.It wasappraised at P120,000.On April 15, 2010, the corporation purchased 5,000 ofits own ordinary shares for P100,000.On June 15,2010, 2,000 of the treasury shares were sold at P24per share.
