Transcript Chapter 11.ppt

11-1
11
REPORTING AND
ANALYZING
STOCKHOLDER’S EQUITY
11-2
Financial Accounting, Sixth Edition
Study Objectives
11-3
1.
Identify and discuss the major characteristics of a corporation.
2.
Record the issuance of common stock.
3.
Explain the accounting for the purchase of treasury stock.
4.
Differentiate preferred stock from common stock.
5.
Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
6.
Identify the items that affect retained earnings.
7.
Prepare a comprehensive stockholders’ equity section.
8.
Evaluate a corporation’s dividend and earnings performance
from a stockholder’s perspective.
Reporting and Analyzing Stockholders’ Equity
The
Corporate
Form of
Organization
Characteristics
Formation
Stockholder
rights
11-4
Stock Issue
Considerations
Authorized
stock
Issuance
Par and no-par
value
Accounting for
common stock
issues
Accounting
for Treasury
Stock
Purchase of
treasury stock
Preferred
Stock
Dividend
preferences
Liquidation
preference
Dividends
and Retained
Earnings
Cash
dividends
Stock
dividends
Stock splits
Retained
earnings
restrictions
Financial
Statement
Presentation
and Corporate
Performance
Balance sheet
Statement of
cash flows
Dividend
record
Earnings
performance
Debt vs.
equity
decision
The Corporate Form of Organization
An entity separate and distinct from its owners.
Classified by Ownership
Classified by Purpose
Not-for-Profit
Publicly held
For Profit
Privately held
►
Salvation Army
►
Nike
►
American Cancer
Society
►
General Motors
►
IBM
Gates Foundation
►
General Electric
►
11-5
►
Cargill Inc.
The Corporate Form of Organization
Characteristics of a Corporation
11-6

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Corporate Management

Government Regulations

Additional Taxes
Advantages
Disadvantages
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Characteristics of a Corporation
11-7

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Corporate Management

Government Regulations

Additional Taxes
Corporation acts
under its own name
rather than in the
name of its
stockholders.
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Characteristics of a Corporation
11-8

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Corporate Management

Government Regulations

Additional Taxes
Limited to their
investment.
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Characteristics of a Corporation
11-9

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Corporate Management

Government Regulations

Additional Taxes
Shareholders may
sell their stock.
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Characteristics of a Corporation
11-10

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Corporate Management

Government Regulations

Additional Taxes
Corporation can
obtain capital
through the issuance
of stock.
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Characteristics of a Corporation
11-11

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Corporate Management

Government Regulations

Additional Taxes
Continuance as a
going concern is not
affected by the
withdrawal, death, or
incapacity of a
stockholder,
employee, or officer.
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Characteristics of a Corporation
11-12

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Corporate Management

Government Regulations

Additional Taxes
Separation of
ownership and
management
prevents owners from
having an active role
in managing the
company.
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Characteristics of a Corporation
11-13

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Corporate Management

Government Regulations

Additional Taxes
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Characteristics of a Corporation
11-14

Separate Legal Existence

Limited Liability of Stockholders

Transferable Ownership Rights

Ability to Acquire Capital

Continuous Life

Corporate Management

Government Regulations

Additional Taxes
Corporations pay
income taxes as
 a separate legal
entity and
 stockholders pay
taxes on cash
dividends.
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Stockholders
Illustration 11-1
Corporation
organization chart
Chairman and
Board of
Directors
President and
Chief Executive
Officer
General
Counsel and
Secretary
Vice President
Marketing
Treasurer
11-15
Vice President
Finance/Chief
Financial Officer
Vice President
Operations
Vice President
Human
Resources
Controller
SO 1 Identify and discuss the major characteristics of a corporation.
11-16
The Corporate Form of Organization
Characteristics of a Corporation
Other Forms of Business Organization
11-17

Limited partnerships

Limited liability partnerships (LLPs)

Limited liability companies (LLCs)

S Corporation
►
no double taxation
►
cannot have more than 75 shareholders
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Forming a Corporation
Initial Steps:

File application with the Secretary of State.

State grants charter.

Corporation develops by-laws.
Companies generally incorporate in a state whose laws are
favorable to the corporate form of business (Delaware, New Jersey).
Corporations engaged in interstate commerce must obtain a license
from each state in which they do business.
11-18
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Stockholders Rights
Illustration 11-3
1. Vote in election of board of
directors and on actions that
require stockholder approval.
2. Share the corporate earnings
through receipt of dividends.
11-19
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Stockholders Rights
Illustration 11-3
3. Keep the same percentage ownership when new
shares of stock are issued (preemptive right).
11-20
SO 1 Identify and discuss the major characteristics of a corporation.
The Corporate Form of Organization
Stockholders Rights
Illustration 11-3
4. Share in assets upon liquidation in proportion to
their holdings. This is called a residual claim.
11-21
SO 1 Identify and discuss the major characteristics of a corporation.
Stock Issue Considerations
Authorized Stock
11-22

Charter indicates the amount of stock that a
corporation is authorized to sell.

Number of authorized shares is often reported in the
stockholders’ equity section.
SO 1 Identify and discuss the major characteristics of a corporation.
Stock Issue Considerations
Prenumbered
Shares
Illustration 11-4
Name of corporation
Stockholder’s
name
Signature of
corporate official
11-23
SO 1 Identify and discuss the major characteristics of a corporation.
Stock Issue Considerations
Issuance of Stock


11-24
Corporation can issue common stock
►
directly to investors or
►
indirectly through an investment banking firm.
U.S. securities exchanges
►
New York Stock Exchange
►
American Stock Exchange
►
13 regional exchanges
►
NASDAQ national market
SO 1 Identify and discuss the major characteristics of a corporation.
11-25
Stock Issue Considerations
Par and No-Par Value Stocks

Capital stock that has been assigned a value per share.

Years ago, par value determined the legal capital per
share that a company must retain in the business for the
protection of corporate creditors.

Today many states do not require a par value.

No-par value stock is quite common today.

In many states the board of directors assigns a stated
value to no-par shares.
11-26
SO 1 Identify and discuss the major characteristics of a corporation.
Stock Issue Considerations
Review Question
Which of these statements is false?
a. Ownership of common stock gives the owner a
voting right.
b. The stockholders’ equity section begins with paid-in
capital.
c. The authorization of capital stock does not result in a
formal accounting entry.
d. Legal capital is intended to protect stockholders.
11-27
SO 1 Identify and discuss the major characteristics of a corporation.
Stock Issue Considerations
Common Stock
Account
Paid-in Capital
Preferred Stock
Paid-in Capital in
Excess of Par
Account
Account
Two Primary
Sources of
Equity
Retained Earnings
Account
Paid-in capital is the total amount of cash and other assets paid in
to the corporation by stockholders in exchange for capital stock.
11-28
SO 2 Record the issuance of common stock.
Stock Issue Considerations
Common Stock
Account
Paid-in Capital
Preferred Stock
Paid-in Capital in
Excess of Par
Account
Account
Two Primary
Sources of
Equity
Retained Earnings
Account
Retained earnings is net income that a corporation retains for
future use.
11-29
SO 2 Record the issuance of common stock.
Stock Issue Considerations
Accounting for Common Stock Issues
Primary objectives:
1) Identify the specific sources of paid-in capital.
2) Maintain the distinction between paid-in capital and
retained earnings.
Other than consideration received, the issuance of common
stock affects only paid-in capital accounts.
11-30
SO 2 Record the issuance of common stock.
Stock Issue Considerations
Accounting for Common Stock Issues
Illustration: Assume that Hydro-Slide, Inc. issues 1,000
shares of $1 par value common stock at par. Prepare the
journal entry.
Cash
1,000
Common stock (1,000 x $1)
11-31
1,000
SO 2 Record the issuance of common stock.
Stock Issue Considerations
Accounting for Common Stock Issues
Illustration: Now assume Hydro-Slide, Inc. issues an
additional 1,000 shares of the $1 par value common stock for
cash at $5 per share. Prepare Hydro-Slide’s journal entry.
Cash
11-32
5,000
Common stock (1,000 x $1)
1,000
Paid-in capital in excess of par value
4,000
SO 2 Record the issuance of common stock.
Stock Issue Considerations
Stockholders’ equity section assuming Hydro-Slide, Inc. has
retained earnings of $27,000.
Illustration 11-5
11-33
SO 2 Record the issuance of common stock.
Stock Issue Considerations
Review Question
ABC Corp. issues 1,000 shares of $10 par value common
stock at $12 per share. When the transaction is recorded,
credits are made to:
a. Common Stock $10,000 and Paid-in Capital in Excess of
Stated Value $2,000.
b. Common Stock $12,000.
c. Common Stock $10,000 and Paid-in Capital in Excess of
Par Value $2,000.
d. Common Stock $10,000 and Retained Earnings $2,000.
11-34
SO 2 Record the issuance of common stock.
11-35
Accounting for Treasury Stock
Common Stock
Account
Paid-in Capital
Preferred Stock
Paid-in Capital in
Excess of Par
Account
Account
Two Primary
Sources of
Equity
Retained Earnings
Account
Less:
Treasury Stock
Account
11-36
SO 3 Explain the accounting for the purchase of treasury stock.
Accounting for Treasury Stock
Treasury stock - corporation’s own stock that it has
reacquired from shareholders, but not retired.
Corporations purchase their outstanding stock:
1. To reissue shares to officers and employees under bonus and
stock compensation plans.
2. To increase trading of the company’s stock in the securities
market.
3. To have additional shares available for use in acquiring other
companies.
4. To increase earnings per share.
Another infrequent reason is to eliminate hostile shareholders.
11-37
SO 3 Explain the accounting for the purchase of treasury stock.
Accounting for Treasury Stock
Purchase of Treasury Stock
11-38

Generally accounted for by the cost method.

Debit Treasury Stock for the price paid.

Treasury stock is a contra stockholders’ equity
account, not an asset.

Purchase of treasury stock reduces stockholders’
equity.
SO 3 Explain the accounting for the purchase of treasury stock.
Accounting for Treasury Stock
Illustration 11-6
Illustration: On February 1, 2012, Mead acquires 4,000 shares
of its stock at $8 per share. Prepare the entry.
Treasury stock (4,000 x $8)
Cash
11-39
32,000
32,000
SO 3 Explain the accounting for the purchase of treasury stock.
Accounting for Treasury Stock
Stockholders’ Equity with Treasury stock
Illustration 11-7
Both the number of shares issued (100,000), outstanding (96,000), and
the number of shares held as treasury (4,000) are disclosed.
11-40
SO 3 Explain the accounting for the purchase of treasury stock.
Accounting for Treasury Stock
Review Question
Treasury stock may be repurchased:
a. to reissue the shares to officers and employees under
bonus and stock compensation plans.
b. to signal to the stock market that management believes
the stock is underpriced.
c. to have additional shares available for use in the
acquisition of other companies.
d. more than one of the above.
11-41
SO 3 Explain the accounting for the purchase of treasury stock.
Preferred Stock
Features often associated with preferred stock.

Preference as to dividends.

Preference as to assets in liquidation.

Nonvoting.
Each paid-in capital account title should identify the stock
to which it relates:
11-42

Paid-in Capital in Excess of Par Value—Preferred Stock

Paid-in Capital in Excess of Par Value—Common Stock
SO 4 Differentiate preferred stock from common stock.
Preferred Stock
Illustration: Stine Corporation issues 10,000 shares of
$10 par value preferred stock for $12 cash per share.
Journalize the issuance of the preferred stock.
Cash
120,000
Preferred stock (10,000 x $10)
Paid-in capital in excess of par –
Preferred stock
100,000
20,000
Preferred stock may have a par value or no-par value.
11-43
SO 4 Differentiate preferred stock from common stock.
Preferred Stock
Dividend Preferences

Right to receive dividends before common
stockholders.

Per share dividend amount is stated as a percentage
of the preferred stock’s par value or as a specified
amount.

Cumulative dividend – holders of preferred stock must
be paid their annual dividend plus any dividends in
arrears before common stockholders receive dividends.
11-44
SO 4 Differentiate preferred stock from common stock.
Preferred Stock
Liquidation Preference
11-45

Preference on corporate assets if the corporation fails.

Preference may be
►
for the par value of the shares or
►
for a specified liquidating value.
SO 4 Differentiate preferred stock from common stock.
Preferred Stock
Review Question
M-Bot Corporation has 10,000 shares of 8%, $100 par
value, cumulative preferred stock outstanding at December
31, 2010. No dividends were declared in 2008 or 2009. If MBot wants to pay $375,000 of dividends in 2010, common
stockholders will receive:
a. $0.
b. $295,000.
c. $215,000.
d. $135,000.
11-46
SO 4 Differentiate preferred stock from common stock.
Dividends
A distribution of cash or stock to stockholders on a pro
rata (proportional to ownership) basis.
Types of Dividends:
1.
Cash dividends.
3.
Stock dividends.
2.
Property dividends.
4.
Scrip (promissory note)
Dividends expressed: (1) as a percentage of the par or
stated value, or (2) as a dollar amount per share.
11-47
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Cash Dividends
For a corporation to pay a cash dividend, it must have:
1. Retained earnings - Payment of cash dividends
from retained earnings is legal in all states.
2. Adequate cash.
3. Declaration by the Board of Directors.
11-48
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Dividends require information concerning three dates:
11-49
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Illustration: On Dec. 1, the directors of Media General declare a
50¢ per share cash dividend on 100,000 shares of $10 par value
common stock. The dividend is payable on Jan. 20 to
shareholders of record on Dec. 22:
December 1 (Declaration Date)
Cash dividends
Dividends payable
December 22 (Record Date)
50,000
50,000
No entry
January 20 (Payment Date)
Dividends payable
Cash
11-50
50,000
50,000
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Review Question
Entries for cash dividends are required on the:
a. declaration date and the record date.
b. record date and the payment date.
c. declaration date, record date, and payment date.
d. declaration date and the payment date.
11-51
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Stock Dividends
Illustration 11-10
Pro rata distribution of the corporation’s own stock.
Results in decrease in retained earnings and increase in paid-in capital.
11-52
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Stock Dividends
Reasons why corporations issue stock dividends:
1. Satisfy stockholders’ dividend expectations without
spending cash.
2. Increase the marketability of the corporation’s stock.
3. Emphasize that a portion of stockholders’ equity has
been permanently reinvested in the business.
11-53
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Effects of Stock Dividends
11-54

Changes the composition of stockholders’ equity.

Total stockholders’ equity remains the same.

No effect on the par or stated value per share.

Increases the number of shares outstanding.
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Illustration: Medland Corp. declares a 10% stock dividend on
its $10 par common stock when 50,000 shares were
outstanding. The market price was $15 per share.
Illustration 11-9
11-55
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Stock Split
11-56

Reduces the market value of shares.

No entry recorded for a stock split.

Decrease par value and increase number of
shares.
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Illustration: Assuming that instead of issuing a 10% stock
dividend, Medland splits its 50,000 shares of common stock on
a 2-for-1 basis.
Illustration 11-11
11-57
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Differences between the effects of stock dividends and
stock splits.
Illustration 11-12
11-58
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Dividends
Review Question
Which of these statements about stock dividends is true?
a. Stock dividends reduce a company’s cash balance.
b. A stock dividend has no effect on total stockholders’
equity.
c. A stock dividend decreases total stockholders’ equity.
d. A stock dividend ordinarily will increase total
stockholders’ equity.
11-59
SO 5 Prepare the entries for cash dividends and understand the
effect of stock dividends and stock splits.
Retained Earnings
11-60

Retained earnings is net income that a company
retains for use in the business.

Net income increases Retained Earnings and a
net loss decreases Retained Earnings.

Retained earnings is part of the stockholders’
claim on the total assets of the corporation.

A debit balance in Retained Earnings is identified
as a deficit.
SO 6 Identify the items that affect retained earnings.
Retained Earnings
Illustration 11-14
11-61
SO 6 Identify the items that affect retained earnings.
Retained Earnings
Retained Earnings Restrictions
Restrictions can result from:
1. Legal restrictions.
2. Contractual restrictions.
3. Voluntary restrictions.
11-62
SO 6 Identify the items that affect retained earnings.
Presentation of Stockholders’ Equity
Balance Sheet Presentation
Two classifications of paid-in capital:
1. Capital stock
2. Additional paid-in capital
11-63
SO 7 Prepare a comprehensive stockholders’ equity section.
Presentation of Stockholders’ Equity
Balance
Sheet
Presentation
11-64
Illustration 11-16
SO 7 Prepare a comprehensive stockholders’ equity section.
Measuring Corporate Performance
Dividend Record
Illustration: The following is the calculation of the payout ratio for
Nike in 2009 and 2008.
Illustration 11-18
Illustration 11-18
The payout ratio measures the percentage of earnings a company distributes in
the form of cash dividends.
11-65
SO 8 Evaluate a corporation’s dividend and earnings
performance from a stockholder’s perspective.
Measuring Corporate Performance
Earnings Performance
Illustration: The following is the calculation of Nike’s return on
common stockholders’ equity ratios for 2009 and 2008.
Illustration 11-20
This ratio shows how many dollars of net income a company earned for each dollar
of common stockholders’ equity.
11-66
SO 8 Evaluate a corporation’s dividend and earnings
performance from a stockholder’s perspective.
Measuring Corporate Performance
Debt Versus Equity Decision
Illustration 11-21
11-67
SO 8 Evaluate a corporation’s dividend and earnings
performance from a stockholder’s perspective.
Measuring Corporate Performance
Debt Versus Equity Decision
Illustration 11-22
11-68
SO 8 Evaluate a corporation’s dividend and earnings
performance from a stockholder’s perspective.
Measuring Corporate Performance
Illustration: Microsystems Inc. currently has 100,000 shares of
common stock outstanding issued at $25 per share and no debt. It is
considering two alternatives for raising an additional $5 million: Plan
A involves issuing 200,000 shares of common stock at the current
market price of $25 per share. Plan B involves issuing $5 million of
12% bonds at face value. Income before interest and
taxes will be $1.5 million; income taxes are expected to be 30%.
Illustration 11-23
11-69
SO 8
Entries for Stock
Dividends
appendix 11A
Illustration: Medland Corporation declares a 10% stock dividend on its
50,000 shares of $10 par value common stock. The current fair market
value of its stock is $15 per share. Record the entry on the declaration
date:
Retained earnings (50,000 x 10% x $15)
Common stock dividends distributable
Paid-in capital in excess of par
75,000
50,000
25,000
Illustration 11A-1
11-70
SO 9 Prepare entries for stock dividends.
Entries for Stock
Dividends
appendix 11A
Illustration: Record the journal entry when Medland issues the dividend
shares.
Common stock dividends distributable
Common stock
11-71
50,000
50,000
SO 9 Prepare entries for stock dividends.
Key Points
11-72

Under IFRS, the term reserves is used to describe all equity
accounts other than those arising from contributed capital. This
would include, for example, reserves related to retained
earnings, asset revaluations, and fair value differences.

Many countries have a different mix of investor groups than in
the United States. For example, in Germany, financial
institutions like banks are not only major creditors of
corporations but often are the largest corporate stockholders
as well. In the United States, Asia, and the United Kingdom,
many companies rely on substantial investment from private
investors.
Key Points

11-73
There are often terminology differences for equity accounts.
The following summarizes some of the common differences in
terminology.
Key Points

11-74
The accounting for treasury stock differs somewhat between
IFRS and GAAP. (However, many of the differences are beyond
the scope of this course.) Like GAAP, IFRS does not allow a
company to record gains or losses on purchases of its own
shares. One difference worth noting is that, when a company
purchases its own shares, IFRS treats it as a reduction of
stockholders’ equity, but it does not specify which particular
stockholders’ equity accounts are to be affected. Therefore, it
could be shown as an increase to a contra equity account
(Treasury Stock) or a decrease to retained earnings or share
capital. IFRS requires that the number of treasury shares held
be disclosed.
Key Points
11-75

A major difference between IFRS and GAAP relates to the
account Revaluation Surplus. Revaluation surplus arises under
IFRS because companies are permitted to revalue their
property, plant, and equipment to fair value under certain
circumstances. This account is part of general reserves under
IFRS and is not considered contributed capital.

As indicated earlier, the term reserves is used in IFRS to
indicate all noncontributed (non–paid-in) capital. Reserves
include retained earnings and other comprehensive income
items, such as revaluation surplus and unrealized gains or
losses on available-for-sale securities.
Key Points
11-76

IFRS often uses terms such as retained profits or accumulated
profit or loss to describe retained earnings. The term retained
earnings is also often used.

The accounting related to prior period adjustments is
essentially the same under IFRS and GAAP.

Equity is given various descriptions under IFRS, such as
shareholders’ equity, owners’ equity, capital and reserves, and
shareholders’ funds.
Looking into the Future
The IASB and the FASB are currently working on a project related
to financial statement presentation. An important part of this study
is to determine whether certain line items, subtotals, and totals
should be clearly defined and required to be displayed in the
financial statements. The options of how to present other
comprehensive income under GAAP will change in any converged
standard. Also, the FASB has been working on a standard that will
likely converge to IFRS in the area of hybrid financial instruments,
such as bonds that are convertible to common stock.
11-77
Under IFRS, a purchase by a company of its own shares
is recorded by:
a) an increase in Treasury Stock.
b) a decrease in contributed capital.
c) a decrease in share capital.
d) All of these are acceptable treatments.
11-78
The term reserves is used under IFRS with reference to all
of the following except:
a) gains and losses on revaluation of property, plant,
and equipment.
b) capital received in excess of the par value of issued
shares.
c) retained earnings.
d) fair value differences.
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Under IFRS, the amount of capital received in excess of
par value would be credited to:
a) Retained Earnings.
b) Contributed Capital.
c) Share Premium.
d) Par value is not used under IFRS.
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