Understanding Australian Accounting Standards 3E - Loftus - SMch03_sm_loftus

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1、SolutionsManualtoUnderstandingAustralianAccountingStandardsSolutionsManualtoaccompanyUnderstandingAustralianAccountingStandardsJaniceLoftus,KenLeo,RuthPicker,VictoriaWise,KerryClarkByKenLeoJohnWiley&SonsAustralia,Ltd20133.31©JohnWileyandSonsAustraliaLtd2013SolutionsManualtoUnders

2、tandingAustralianAccountingStandardsChapter3:Shareholders’equity:sharecapitalandreservesComprehensionquestions1.Explainthenatureofareserve.Howdoreservesdifferfromtheothermaincomponentsofequity?UnderAustralianaccountingstandardstherearetwoformsofequity:-contributedequity:inflowsfr

3、omequitycontributors-reservesSeeparas4.20–4.23oftheConceptualFrameworkReservesariseasaresultofincreasesinequityotherthanfromcontributionsfromequityparticipants.Theymayarisefromvariousactions:-earningsofprofits[retainedearnings]-increasesinthefairvalueofassets[assetrevaluationsurp

4、lus].Unlikesharecapital,reservesarenotcreatedviacashflowsintotheentity.Dividendsmaybepaidoutofreserves,butnotoutofcapital.2.Thetelecommunicationsindustryinaparticularcountryhasbeenapartofthepublicsector.Asapartofitsprivatisationagenda,thegovernmentdecidedtoestablishalimitedliabil

5、itycompanycalledTelecomPlus,withtheissueof10million$3shares.Thesesharesweretobeofferedtothecitizensofthecountry.Thetermsofissueweresuchthatinvestorshadtopay$2onapplicationandtheother$1persharewouldbecalledatalatertime.Explain:(a)Thenatureofthelimitedliabilitycompany,andinparticul

6、arthefinancialobligationsofacquirersofsharesinthecompany.(b)Thejournalentriesthatwouldberequiredifapplicationswerereceivedfor11millionshares.Thenatureofalimitedliabilitycompanyissuchthatshareholders’liabilityislimitedtotheissuepriceofashare.Ifthesharesareissuedatparvalue,theliabi

7、lityislimitedtopaymentofthatparvaluepershare.Ifsharesareissuedatagivenprice,thelimitationistothatprice.Thejournalentriesare–assumingthatapplicationswerereceivedfor10millionshares:CashTrustDr20000000ApplicationCr20000000(Receiptofapplicationmoney)ApplicationDr20000000SharecapitalC

8、r20000000(Issueofshares)CashDr20000000Ca