1 FV of ordinary shares (10,000 x 360) 3,600,000

FV of preference shares (20,000 x 270) 5,400,000

Total 9,000,000

Proceeds allocated to PS (8,000,000 x 54/90) 4,800,000

Less: PV of PS (20,000 x 200) 4,000,000
Share premium on preference 800,000 C

Proceeds from bonds and ordinary issuance 11,000,000

Less: FV of bonds payable 5,000,000
Proceed allocated to ordinary shares 6,000,000
Proceeds allocated to OS with PS (8M x 36/90) 3,200,000
Total 9,200,000
Less: PV (30,000 x 100) 3,000,000
SP on ordinary shares 6,200,000 D

2 Proceeds (15,000 x 60) 900,000

Less: Cost of treasury shares (15,000 x 50) 750,000
Gain and Share premium from treasury shares 150,000

Proceeds (5,000 x 45) 225,000

Less: Cost of treasury shares 250,000
Loss and debit from Share premium from treasury (25,000)

Total Share premium (2M + 150k - 25K) 2,125,000 A

3 Shares issued (100 + 10) x 2 220,000

Share outstanding (95 + 1 + 10) x 2 212,000 A

4 Share capital before retirement 2,500,000

Less: PV of retired treasury shares 250,000
Share capital after retirements 2,250,000 C

5 Share capital 2,000,000

Share premium 1,000,000
RE 1,500,000
Treasury shares (200,000)
TSHE 4,300,000
Proceeds from issue price of TS (5,000 x 30) 150,000
Bal. Of SHE after issuance and retirement 4,450,000 A

6 Shares issued at 150 30,000

Issued for legal services 2,000
2 for 1 share split 32,000
Issued at 75 10,000
Number of issued shares 12/31 74,000

Excess over par

(150 - 100) x 30,000 1,500,000
250,000 - (2,000 x 100) 50,000
(120% - 98%) x 5,000,000 1,100,000
(75 - 50) x 10,000 250,000
Total share premium 2,900,000

Share capital (74,000 x 50) 3,700,000 C

Share premium (computed above) 2,900,000 B
RE 2,000,000
TS at cost (10,000 x 60) (600,000)
SHE 8,000,000 A

Outstading Shares (74k - 10k) 64,000 A

1 RE 1/1 5,000,000
Small stock dividend (750,000)
Net loss (1,500,000)
RE 12/31 2,750,000 A

2 RE 1/1 5,000,000
20% Stock dividend (110,000 - 10,000) x 20% x 50 (1,000,000)
Cash dividend (100,000 + 20,000) x 10 (1,200,000)
Net income 3,000,000
Total 12/31 RE 5,800,000
Appropriation for treasury shares (600,000)
RE Unappropriated 12/31 5,200,000 A

3 RE 1/1 5,000,000
FV of property dividend on 7/1 (1,500,000)
Adjustment to FV of property dividend on BS date (300,000)
Net income 3,000,000
RE 12/31 6,200,000 B

Inventory at LCNRV 1,200,000 A

FV of asset and CA of Dividend Payable 2,000,000

Less: CA of Inventory 1,200,000
Gain on distribution 800,000 C

4 Cash Dividend (10 x 80% x 500K) 4,000,000

Property Dividend (10 x 20% x 600k) 1,200,000
Dividend Payable 5,200,000 B

FV of property dividend (10 x 700,000) 7,000,000

Less: CA 4,500,000
Gain on distribution 2,500,000 B

5 Total dividend declared 4,000,000

Less: Balance of RE 3,000,000
Liquidating Dividend Debited to "CAPITAL LIQUIDATED" 1,000,000 A

6 RE 1/1/17 200,000
Adjustment for 2016 overdepreciation 100,000
Net income 1,300,000
Cancellation of appropriation 200,000
Increase in appropriation for contingency (100,000)
Cash dividends (500,000)
Credit adjustment for chang in inventory valuation 150,000
RE 12/31 1,350,000 B

7 Appropriation for treasury shares 1,000,000

Appropriation for expansion 2,000,000
Total appropriated RE 3,000,000 A
1 Total number of share options

2017 Compensation expense

2018 Compensation expense ((500 - 30 - 30)*100) / 3 * 2 - 500,000

2019 Compensation expense (500 - 30 - 20)* 100 - (500,000 + 380,000)

Issue price of Shares at option price (45,000 x 120)

Share options outstanding balance
Total
Less: PV of shares
Share premium

2 2017 Compensation expense

2018 Compensation expense
2019 Compensation expense (SQUEEZED)
Total

2017 Compensation expense

2018 Compensation expense
2019 Compensation expense (SQUEEZED)
Payment made

3
2016 (60,000 x (62 - 60) / 3
2017 (60,000 x (66 - 60) / 3 x 2
2018 (60,000 x (75 - 60)
2019 (60,000 x (85 - 60)

Issue price of shares at option price (60,000 x 60)

Share options outstanding balance
Total
Less: PV of shares
Share premium

4
2017 (50,000 x (124 - 100) / 3
2018 (50,000 x (151 - 100) / 3 x 2
2019 (50,000 x (151 - 100)

Liability for SAR 12/31/18

Less: Adjusted liability on 12/31/19 (120 - 100) x 50,000
Gain on reversal of SAR
5 2017 Compensation expense:

12/31/17 Market price

Less: Predetermined price
Share appreciation
Number of SARs
2017 Compensation expense

12/31/18 Market price

Less: Predetermined price
Share appreciation
Number of SARs
12/31/18 Payment of SARs
Less: 2017 Compensations payable
Gain on reversal
 50,000

500,000 A

380,000 B

470,000 D

5,400,000
1,350,000
6,750,000
4,500,000
2,250,000 A

1,500,000
1,300,000
3,200,000 A
6,000,000

1,500,000
1,300,000
2,200,000 B
5,000,000

Cumulative Compensation Expense

40,000
240,000 200,000
900,000 660,000
1,500,000 600,000 B

3,600,000
1,500,000
5,100,000
3,000,000
2,100,000 A

Cumulative Compensation Expense

400,000
1,700,000 1,300,000
2,550,000 850,000 C

1,700,000
1,000,000
700,000 C
 115
100
15
50,000
750,000 A

110
100
10
50,000
500,000
750,000
-250,000 C
1 FV of COMPOUND FINANCIAL INSTRUMENT (Share alternative) (25,000 x 48)
Less: FV of Liability Component (Cash alternative) (20,000 x 51)
FV of EQUITY component of SBP

2017
FV of liability component (54 x 20,000) / 3
FV of equity component (180,000 / 3 years)
Total compensation expense

2018
FV of liability component (66 x 20,000) / 3 x 2 = 880,000 - 360,000
FV of equity component
Total compensation expense

2019
FV of liability component (65 x 20,000) - (360,000 + 520,000)
FV of equity component
Total compensation expense

Total compensations payable as consideration for shares

Total equity component
Total amount
Less: PV of shares (25,000 x 30)
Share premium from issuance if settled in shares

If the SBP is settled in cash, the equity component (SOO acct) is closed to Share premium

2 FV of COMPOUND FINANCIAL INSTRUMENT (Fair value of goods or services received)

Less: FV of Liability Component (Cash alternative) (40,000 x 110)
FV of EQUITY component of SBP

Settlement price (130 x 40,000)

Less: 1/1/17 Liability
Increase in liability as expense

Liability component (accts payable) as consideration

Equity component to be transferred to SP

Less: PV (50,000 x 50)

Share premium

3 12/31/17 Market price

Less: Predetermined price
Share appreciation
Number of SARs
2017 Compensation expense

12/31/18 Market price

Less: Predetermined price
Share appreciation
Number of SARs
12/31/18 Cumulative compensation expense
Less: 2017 Compensations expense
2018 Compensation expense

12/31/2018 Compensations payable (as above)

Less: 2019 payments from exercise (30 - 20) x 20,000
Balance before adjustment
Gain on reversal or decrease in payable (SQUEEZED)
12/31/2019 Compensations payable (30 - 20) x 40,000
1,200,000
1,020,000
180,000

360,000
60,000
420,000 C

520,000
60,000
580,000 C

420,000
60,000
480,000 A

1,300,000
180,000
1,480,000
750,000
730,000 A

180,000 C

5,000,000 A
4,400,000
600,000 C

5,200,000
4,400,000
800,000 C

4,400,000
600,000
5,000,000
2,500,000
2,500,000 B

28
20
8
60,000
480,000

35
20
 15
60,000
900,000
480,000
420,000 B

900,000
200,000
700,000
-300,000 B
400,000
1 Liquidation value 3,450,000
Preferred dividends 300,000
Preference shareholders' equity 3,750,000
Preference shares outstanding 30,000
BV per preference share 125 A

2 Liquidation value 3,300,000

Preferred dividends 1,500,000
Preference shareholders' equity 4,800,000

TSHE 12,000,000
Less: PSHE 4,800,000
Ordinary shareholders' equity 7,200,000
Ordinary shares outstanding 50,000
BV per share 144 A

3 TSHE 9,800,000
Ordinary shares outstanding 80,000
BV per share 122.50 A

4 Dividends in arears 300,000

Current year dividends 300,000
Total 600,000
Less: Dividends paid 200,000
Balance to be DISCLOSED 400,000 D

5 Total declaration 9,500,000

Preferred dividend (5M x 10%) (500,000)
Preferred dividend (10M x 12% x 5) (6,000,000)
Ordinary dividend (10M x 12%) (1,200,000)
Balance for participation 1,800,000

Balance to ordinary (1.8M x 10/20) 900,000

Balance to preference (1.8M x 10/20) 900,000

Total dividend to 12% PS (6M + 900K) 6,900,000 B

PD to 10% PS 500,000 C
Total dividend to OS (1.2M + 900k) 2,100,000 A

6 Deficit (2,000,000)
Adjustment to inventory (500,000)
Adjustment to Plant assets (1,000,000)
Adjustment to accounts payable (300,000)
Adjusted deficit 3,800,000

Share premium 500,000

Contribution from shareholders 1,500,000
Recapitalization of shares 2,500,000
Total share premium 4,500,000

Balace of share premium after QRO (4.5M - 3.8M) 700,000

Share capital 2,500,000

Share premium 700,000
RE 0
SHE 3,200,000 A
1 Net income
Less: Preferred dividend requirement on cumulative pref shares
Net income to ordinary shareholders
Divide by
Basic earnings per share

2
Beginning balance
April 1: Issuance
May 1: 2 for 1 share split
June 30: Acquisition
July 30: 20% Bonus issue
December 31: 3 for share split
Ending balance

3 Total fair value of shares (60,000 x 160)

Proceeds from exercise (60,000/5) x 100
Total amount
Divide by total number of shares
FV of shares ex-right

Fair value of shares

Divide by FV of shares ex-right
Adjustment factor

1/1 to 3/31 (60,000 x 106.67 % x 3/12)

4/1 to 12/31 (72,000 x 9/12)
Weighted Average number of shares

Net income
Divide by average number of shares
Basic EPS

4 Profit before taxes

Less: Income tax expense
Net income
Divide by ordinary shares outstanding (1M / P5 PV)
BEPS

5 Net income
Less: Preferred dividend paid (assumed noncumulative)
Net income to ordinary shareholders
Divide by (200,000 x 1.10)
Basic earnings per share
6 Net income
Less: Preferred dividend requirment on cumulative pref. shares
Net income to ordinary shareholders
Divide by (200,000 x 200%)
Basic earnings per share

7 Net income
Less: Preferred dividend requirement on cumulative pref. shares
Net income to ordinary shareholders
Divide by (30M / 100) - 50,000 treasury shares
Basic earnings per share

8 2018 weighted average

1/1 100,000 x 2 x 12/12

4/1 20,000 x 2 x 9/12
Weighted average outstanding ordinary shares

2017 weighted average (100,000 x 2)

Net income
Divide by
2018 Basic earnings per share

Net income
Divide by
2017 Basic earnings per share
 4,000,000
300,000
3,700,000
50,000
74 A

Adjustment Adjusted Number Months Outstanding Average

100,000 x 2 x 1.20 x 3 720,000 12 mo / 12 mo 720,000
30,000 x 2 x 1.20 x 3 216,000 9 mo / 12 mo 162,000
130,000
(10,000) x 1.20 x 3 (36,000) 6 mo / 12 mo (18,000)
50,000
600,000
900,000 900,000 864,000 B

9,600,000
1,200,000
10,800,000
72,000
150

160
150
106.67%

16,000
54,000
70,000

4,000,000
70,000
57.14 A

6,000,000
1,800,000
4,200,000
200,000
21 C

1,920,000
200,000
1,720,000
220,000
7.82 D
7,500,000
400,000
7,100,000
400,000
17.75 C

15,000,000
500,000
14,500,000
250,000
58.00 A

200,000
30,000
230,000

200,000

4,100,000
230,000
17.83 B

3,500,000
200,000
17.50 B
1

4
6

7
2017 weighted average

1/1 100,000 x 12/12

9/1 10,000 x 6 = 60,000 x 4/12
Weighted average outstanding ordinary shares

Net income
Less: Preferred dividend paid
Net income to ordinary shareholders
Divide by
Basic earnings per share

Net income
Divide by (100,000 + 60,000)
Diluted earnings per share

2017 weighted average

1/1 200,000 x 12/12

10/1 4,000 x 40 = 160,000 x 3/12
Weighted average outstanding ordinary shares

Net income
Divide by
Basic earnings per share

Net income
Interest expense on bonds net of tax (4M x 10% x 9/12 x 9/12)
Adjusted Net Income
Divide by (200,000 + 160,000)
Diluted earnings per share

Proceeds from exercise of share options (40,000 x 20)

Assumed treasury shares (800,000 / 25)
Incremental ordinary shares from share options (40k - 32k)

Net income
Divide by (200,000 x 1.1)
Basic earnings per share

Net income
Divide by (200,000 x 1.1) + 8,000
Diluted earnings per share

Net income
Less: Preferred dividend (5 x 20,000)
Net income to ordinary shareholders
Divide by
Basic earnings per share
Proceeds from exercise of share options (60,000 x 15)
Assumed treasury shares (900,000 / 20)
Incremental ordinary shares from share options (60k - 45k)

Convertible pref. Shares

Convertible bonds
Share options
Total potential ordinary shares

Effect or adjustment to net income of Incremental OS

Dividends on preference shares

Interest on bonds payable

Less: Taxes
Interest net of taxes

Incremental EPS Computation (Effect on NI divided by Incremetal shares)

Share options ( Zero divided by 15,000)

Convertible preference shares (100,000 / 40,000)
Convertible bonds payable (140,000 / 30,000)

Net income
Divide by Ordinary shares and Incremental shares from share options
Diluted EPS

Adjsuted net income

Divide by Ordinary shares and Incremental shares from SO and CPS
Diluted EPS

Proceeds from exercise of put options

Assumed treasury shares

Incremental ordinary shares

Net Loss
Less: Preference dividends
Net loss to ordinary shares
Divide by
Basic and Diluted loss per share

The Diluted Loss per Share is also 64 because the assumed conversion of the preference shares will reduce the loss per share

LPS if converted ( 3M / (50k + 20k)

 100,000
20,000
120,000

2,000,000
50,000
1,950,000
120,000
16.25 A

2,000,000
160,000
12.50 A

200,000
40,000
240,000

5,000,000
240,000
20.83 C

5,000,000
210,000
5,210,000
360,000
14.47 A

800,000
32,000
8,000

1,100,000
220,000
5.00 B

1,100,000
228,000
4.82 B

650,000
100,000
550,000
110,000
5.00 A
 900,000
45,000
15,000

40,000
30,000
15,000
85,000 C

100,000

200,000
60,000
140,000

0 Most Dilutive
2.50 Second
4.67 Least Dilutive

550,000
125,000
4.40

650,000
165,000
3.94 D

7,000,000

25,000

5,000 C

(3,000,000)
(200,000)
(3,200,000)
50,000
(64) B and #2 D

l reduce the loss per share to 42.86

(42.86)