An analysis of equity of Hahn Corporation as of January 1, 2012, 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 2010 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 2012, what should Hahn report at December 31, 2012, as total share premium?

Question

Business

Franklin

1 April, 18:26

An analysis of equity of Hahn Corporation as of January 1, 2012, 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 2010 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 2012, what should Hahn report at December 31, 2012, as total share premium?

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Answers (1)

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Gregory Lloyd · Answer 1

P905,000

Explanation:

Initial share premium - ordinary = P900,000

Total share premium = P900,000 + (2,000 * P5) - (500 * P10) = P900,000 + P10,000 - P5,000 = P905,000

Therefore, Hahn should report P905,000 as total share premium at December 31, 2012.