An analysis of equity of Hahn Corporation as of January 1, 2020, is as follows: Share...
An analysis of equity of Hahn Corporation as of January 1, 2020, is as follows: Share capital—ordinary, par value P20; authorized 100,000 shares; issued and outstanding 90,000 shares P1,800,000 Share premium—ordinary 900,000 Retained earnings 760,000 Total P3,460,000 Hahn uses the cost method of accounting for treasury shares and during 2020 entered into the following transactions: Acquired 2,500 of its shares for P75,000. Sold 2,000 treasury shares at P35 per share. Sold the remaining treasury shares at P20 per share. Assuming no other equity transactions occurred during 2020, what should Hahn report at December 31, 2020, as total share premium?
Homework Answers
| Working Notes: | |||
| Calculation of Purchase Price of Treasury Stock | |||
| Purchase value of Treasury Stock 2,500 Shares = | 75,000 | ||
| Purchase Price per Shares = P 75,000 / 2,500 = | 30 | ||
| Solution: | |||
| Calculation of Total Share Premium as on December 31. 2020 | |||
| Beginning Balance of Share Premium - Ordinary | 9,00,000 | ||
| Shares Premium on Treasury Stock | |||
| 2000 Shares are sold at Premium of P 5 (35 - 30) = (2000 X 5) | 10,000 | ||
| Remainning 500 Shares at Loss of P 10 (30 -20 ) = (500 X 10) | -5,000 | ||
| Share Premium - Treasury Stock | 5,000 | ||
| Total Share Premium | 9,05,000 | ||
| Answer = Hahn Reported at December 31, 2020, a total Share Premoum = P 905,000 | |||
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Paid-in capital in excess of par value-Preferred stock
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Paid-in capital in excess of par value-Common stock
800,000
Retained earnings
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