▪ Cash Trust (for monies received before shares are issued/allotted)
▪ Application ▪ Share Capital ▪ Call (if payable by 2 or more instalments) ▪ Cash ▪ Calls in Advance
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3
Objectives
• Distinguish between different forms of corporate entities.
public companies
• Proprietary companies
▪ Limited membership ▪ Restrictions on raising funds ▪ Large vs small distinction is common
5
Key features of the corporate structure
• A company is a legal entity • Limited liability • Share capital ledger account reflects the
company’s ownership
▪ Each share represents a proportional right to the company’s net assets
reissue.
4
Types of companies
• Listed vs unlisted • Limited, unlimited, vs no-liability • Public companies
▪ Ownership is widely spread ▪ Many company law provisions are directed at
• No accounting entries are prepared when the invitation to subscribe is made
• Accounting commences on receipt of application forms and monies
• Accounts involved:
shareholders.
Preference shares:
• Preferential as to the payment of dividends and / or as to a return of capital in a winding-up.
• Holders are entitled to a fixed annual rate of dividend. • Accounting entries are the same in both isscation monies
• On receipt of application monies:
Cash trust
Dr y
Application
1
Lecture 1
Shareholders’ Equity (Part 1)
2
COMMONWEALTH OF AUSTRALIA COPYRIGHT REGULATIONS 1969
WARNING
This material has been copied and communicated to you by or on behalf of Curtin University of Technology
– ordinary and preference.
7
Issue of public company shares
• A prospectus is required for a public issue. • Minimum subscription may be required. • Issue can be underwritten. • Share issue costs are treated as a reduction in
• Distinguish between different type of shares.
• Account for share issues fully payable on application and by installments.
• Account for oversubscriptions. • Account for share forfeiture and
▪ Companies can issue different types of shares ➢e.g. ordinary or preference shares
6
Types of shares
Ordinary shares:
• Most basic and common type. • Payment of dividends rank after preference
share capital (Dr Share issue costs). • What if the issue is oversubscribed? • Shares issued may have a par value or no par
value.
8
Accounting for share issues
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