Question Tag: Share Capital

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FA – May 2012 – L1 – SA – Q12 – Accounting Concepts

Determining the correct presentation of share capital and share premium after a fresh issue of shares.

Question

At 1 January 2011, the capital structure of Jumbo Plc was as follows:

Issued share capital, 10,000,000 ordinary shares of N1.00 each: N10,000,000
Share premium account: N500,000

On 1 September 2011, the company made a fresh issue of 500,000 shares at N1.30 each. Which of the following correctly presents the company’s share capital and share premium accounts as at 31 December 2011?

A. Share capital N10,000,000, Share premium N650,000
B. Share capital N10,500,000, Share premium N650,000
C. Share capital N10,650,000, Share premium N500,000
D. Share capital N10,150,000, Share premium N1,000,000
E. Share capital N10,000,000, Share premium N500,000

Answer

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Tags: Financial Position, Share Capital, Share Premium
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2012

BL – Nov 2012 – L1 – SA – Q14 – Company Law

Identify the minimum authorized share capital for a private limited company.

Question

What is the minimum authorized Share Capital of a Private Limited Liability Company as prescribed by Companies and Allied Matters Act LFN 2004?

Answer

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Tags: Company Law, Share Capital
Level: Level 1

Topic: Company Law
Series: NOV 2012

FA – Nov 2020 – L1 – SA – Q8 – Elements of Financial Statements

Determines the amount credited to share capital from a rights issue.

Question

The capital structure of Baba Oba Limited is shown below:

Item	N’000
Ordinary share capital: 200,000 shares of 50k each	100
Premium account	150

The company made a rights issue of 1 for 5 at N1.50, and the rights issue was fully subscribed.

What is the amount of the rights issue credited to share capital?
A. N20,000
B. N40,000
C. N50,000
D. N70,000
E. N100,000

Answer

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Tags: Capital structure, Rights Issue, Share Capital
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2020

FA – Nov 2012 – L1 – SA – Q13 – Financial Statements Preparation

Determining the correct statement about limited liability company accounts.

Question

Which of the following statements is correct about the accounts of limited liability companies?

A. Revaluation surplus on a non-current asset arising from disposal of the asset at a profit
B. Events after the reporting period require that non-adjusting events should be disclosed in the notes to the financial statements
C. The authorised share capital consists of a company’s nominal capital value of shares and loan notes raised by the company
D. Revaluation surplus on investment properties is debited to Income Statement
E. Income is not an element of financial statements

Answer

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Tags: Accounts, Company, Revaluation, Share Capital
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2012

BL – May 2013 – L1 – SB – Q4A – Company Law

List and explain five incorporation documents required for registering a company.

Question

Hassan, a young businessman engaged in the manufacturing of “Healthy Energy Drink”, has recently contacted you for the incorporation of a company to be known as Healthy Energy Limited.

You are required to:

State FIVE incorporation documents required to be submitted by the company, indicating the purpose of each document.

Answer

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Tags: Articles of Association, Incorporation, Memorandum of Association, Share Capital
Level: Level 1

Topic: Company Law
Series: MAY 2013

BMF – MAY 2015 – L1 – SA – Q10 – Business and Organizational Structures and Choices

Requirements for incorporating a limited liability company, excluding non-essential documents.

Question

The following are required to incorporate a limited liability company EXCEPT:

A. Memorandum of Association
B. Articles of Association
C. Statement of authorised share capital
D. Location of the registered office
E. Source of finance

Answer

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Tags: Articles of Association, Company Formation, Incorporation, Memorandum of Association, Share Capital
Level: Level 1

Topic: Business and Organizational Structures and Choices
Series: MAY 2015

BL – May 2014 – L1 – SA – Q10 – Agency Law

Identifying the minimum share capital requirement for life insurance business.

Question

An insurer cannot carry on life insurance business if its share capital is less than ____________.

Answer

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Tags: Insurance, Life Insurance, Share Capital
Level: Level 1

Topic: Agency Law
Series: MAY 2014

FR – Dec 2022 – L2 – Q5c – Calculation of EPS for the Year Ended December 31, 2021

This question requires the calculation of EPS for the year 2021, and restating the EPS for the year 2020 using a rights issue adjustment.

Question

On January 1, 2021, Bayor Ltd had 10 million ordinary shares in issue. On 31 March 2021, the company issued at full market price, 2 million ordinary shares. On 31 August 2021, the company made a rights issue of 1 for 5 at GH¢3. The fair value of the shares on the last day before the rights issue was GH¢3.80. Profit for the current period is GH¢3.5 million. The reported Earnings Per Share (EPS) for the year ended December 31, 2020 was 0.33p.

Required: Calculate the EPS for the year ended December 31, 2021, and the restated EPS for the year ended December 31, 2020.

Answer

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Tags: Earnings Per Share, Financial Reporting, IFRS 33, Share Capital
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: DEC 2022

FA – May 2014 – L1 – SA – Q9 – Accounting Concepts

Determines the value of a rights issue for Opa Limited.

Question

Opa Limited has the following capital structure:
Ordinary share capital – 200,000 shares of 50k each – N100,000
Share Premium Account – N150,000

The company made a rights issue of 1 for 5 at N1.50, which was fully subscribed.

Determine the value of the rights issue.
A. N40,000
B. N50,000
C. N60,000
D. N70,000
E. N75,000

Answer

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Tags: Company Finance, Rights Issue, Share Capital
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2014

FA – Nov 2013 – L1 – SB – Q5 – Partnership Accounts

Preparation of journal entries for share issue, forfeiture, and reissue transactions.

Question

Mosafejo Plc issued 200,000 Ordinary Shares of N1.00 each at N1.40 per share, payable as follows:

(i) 35 kobo on application
(ii) 65 kobo on allotment (including premium)
(iii) 40 kobo on first and final call

All the monies were received on due dates except for 20,000 shares not paid on first call. The holders of these shares failed to pay up, and after some reminders, the shares were forfeited. The shares were re-issued at 75 kobo per share, and all the monies received.

You are required to:
(a) Draw up journal entries to record the above transactions.
(11 Marks)

(b) The Share Premium Account may be used in certain circumstances. List any TWO circumstances in which the Share Premium Account may be used.
(4 Marks)

Answer

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Tags: Forfeiture of Shares, Journal Entries, Reissue of Shares, Share Capital, Share Premium
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2013

FA – Nov 2015 – L1 – SB – Q4 – Financial Statements Preparation

Determine total acquisition cost and prepare journals for share issue transactions.

Question

a. The information below shows the analysis of costs of a newly purchased equipment by JONAK Nig. Ltd.

Description	N
Cost of equipment	3,000,000
2% cash discount for payment within 30 days (enjoyed)	60,000
Transport cost	100,000
Hospitality cost for factory workers during installation	25,000
Installation cost	150,000
Repair cost prior to use	65,000
Salaries of operators	125,000

Determine the total acquisition cost of the equipment. (5 Marks)

b. MEMORY Nigeria Limited decided to issue 100,000,000 N1 ordinary shares. The terms of issue are stated below:

(i) 30k on application
(ii) 45k (including premium) on allotment
(iii) 20k to be called one month after allotment
(iv) 25k final call made four months later after allotment.

On December 29, applications were received for 120,000,000 shares. On January 1, the shares were allotted so that every applicant received two-thirds of the number of shares applied for. Excess application monies were held against the amount due on allotment. On January 4, the cash due on allotment was received. On February 1, the first call was made and on February 3, cash was received. On May 1, the second call was made and cash was received on May 3.

Required: b. Raise the necessary Journals to record these transactions. (11 Marks) c. State the difference between authorised share capital and called-up share capital (4 Marks)

(Total 20 Marks)

Answer

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Tags: Acquisition, Equipment Cost, Journal Entries, Share Capital
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2015

FA – May 2018 – L1 – SA – Q12 – Elements of Financial Statements

Determines the number of shares based on authorized share capital in a company’s memorandum of association.

Question

Alaro Company Limited has authorized share capital of N1,000,000 ordinary shares of 50 kobo each. The company issued enough shares at par to raise N900,000. What is the number of shares stated in the Company’s memorandum of association?
A. 900,000 shares
B. 1,000,000 shares
C. 1,600,000 shares
D. 1,800,000 shares
E. 2,000,000 shares

Answer

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Tags: Memorandum of Association, Share Capital
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2018

BMF – Nov 2021 – L1 – SA – Q9 – The Business Environment

Question on share capital requirements for private companies according to CAMA 2020.

Question

In accordance with the provisions of the Companies and Allied Matters Acts (CAMA) 2020, which of the following is TRUE of a private company?

A. 15% of the issued share capital must be paid up at all times
B. 25% of the issued share capital must be paid up at all times
C. 35% of the issued share capital must be paid up at all times
D. 45% of the issued share capital must be paid up at all times
E. 55% of the issued share capital must be paid up at all times

Answer

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Tags: Companies and Allied Matters Act (CAMA), Corporate Governance, Share Capital
Level: Level 1

Topic: The Business Environment
Series: NOV 2021

FA – May 2021 – L1 – SA – Q18 – Financial Statements Preparation

Calculate total dividends paid based on shares and declared dividend per share.

Question

The following information relates to a limited liability company:

Item	N
Authorised share capital of 650,000 of 0.50 each
Issued and paid up capital of N376,000
Share premium of N234,000
The company paid dividends of 16 kobo per share

Calculate the total dividends paid:
A. N30,000
B. N52,000
C. N104,000
D. N120,320
E. N208,000

Answer

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Tags: Dividends, Financial Statements, Share Capital
Level: Level 1

Topic: Financial Statements Preparation
Series: MAY 2021

FA – May 2017 – L1 – SA – Q13 – Elements of Financial Statements

Identifies components of equity in financial statements.

Question

The following are components of equity EXCEPT:
A. Ordinary share capital
B. Share premium
C. Revaluation reserves
D. Retained earnings
E. Loan notes

Answer

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Tags: Equity, Financial Statements, Loan Notes, Share Capital
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2017

FA – Mar/July 2020 – L1 – SB – Q4b -Financial Statements

Preparing share capital and related accounts based on a share issue.

Question

Bravado Limited has an authorised share capital of 10M of N0.50 per share. On November 1, 2019, the company issued the entire shares for public subscription at N0.75 per share.

As at November 10, 12M applications were received through Klassic Bank PLC, the company’s banker. The shares were allotted on a pro rata basis, and the company refunded the excess application money.

You are required to prepare:
i. Share application account
ii. Bank account
iii. Share premium account
iv. Ordinary share capital account
v. Application money refund account

Answer

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Tags: Journal Entries, Share Capital, Share Premium
Level: Level 1

FA – Mar/July 2020 – L1 – SB – Q4a – Financial Statements

Explaining share premium and its five uses.

Question

Explain briefly share premium and outline its FIVE uses.

Answer

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Tags: Application Money, Share Capital, Share Premium
Level: Level 1

FA – Mar/July 2020 – L1 – SA – Q13 – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Correct journal entry for share capital and share premium

Question

P Limited made an issue of 150,000 N1 ordinary shares at a premium of 20%. The shares were fully subscribed and the proceeds were received through the bank.

What is the correct journal to record the above transaction?

Answer

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Tags: Journal Entries, Share Capital, Share Premium
Level: Level 1

PT – Dec 2023 – L2 – Q4a – Corporate Tax Liabilities

Explanation of the tax implications of transferring retained earnings to share capital, including deemed dividend tax and stamp duty.

Question

A Nigerian investor (Niger Ltd) in Ghana has the following information relating to its business:

Year	Revaluation Reserves (GH¢)	Share Capital (GH¢)	Retained Earnings (GH¢)
2021	250,000	1,000,000	1,200,000
2020	100,000	600,000	1,350,000

Required:
With relevant computations, comment on the tax implication of the transfer from Retained Earnings to Share Capital. (8 marks)

Answer

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Tags: Corporate Tax, Deemed Dividend, Retained Earnings, Share Capital, Stamp Duty
Level: Level 2

Topic: Corporate Tax Liabilities
Series: DEC 2023

BCL – Apr 2022 – L1 – Q3b – Types of capital and the financing of companies

Suggest financing methods for AirQuick Ghana office and explain advantages and disadvantages of each method.

Question

b) AirQuick is one of the world’s leading aerospace companies. AirQuick and the Ghana Civil Aviation Authority have conducted a feasibility study in Ghana with the intent of setting up a subsidiary in Ghana. The study which ran for two years has been concluded and a new subsidiary office of AirQuick has just been established in Ghana to serve the West African hub. You have been given a two-year contract in the legal department.

Required:

i) As a business law expert, you have been asked to suggest TWO (2) ways to finance or sustain the activities of the AirQuick Ghana office. (6 marks)

ii) Explain ONE (1) advantage and ONE (1) disadvantage of each financing source identified in i) above. (4 marks)

Answer

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Tags: Company Financing, Debentures, Loan Capital, Public-Private Partnerships, Share Capital
Level: Level 1

Topic: Types of capital and the financing of companies
Series: APR 2022

Question Tag: Share Capital

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FA – May 2012 – L1 – SA – Q12 – Accounting Concepts

Determining the correct presentation of share capital and share premium after a fresh issue of shares.

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BL – Nov 2012 – L1 – SA – Q14 – Company Law

Identify the minimum authorized share capital for a private limited company.

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FA – Nov 2020 – L1 – SA – Q8 – Elements of Financial Statements

Determines the amount credited to share capital from a rights issue.

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FA – Nov 2012 – L1 – SA – Q13 – Financial Statements Preparation

Determining the correct statement about limited liability company accounts.

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BL – May 2013 – L1 – SB – Q4A – Company Law

List and explain five incorporation documents required for registering a company.

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BMF – MAY 2015 – L1 – SA – Q10 – Business and Organizational Structures and Choices

Requirements for incorporating a limited liability company, excluding non-essential documents.

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BL – May 2014 – L1 – SA – Q10 – Agency Law

Identifying the minimum share capital requirement for life insurance business.

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FR – Dec 2022 – L2 – Q5c – Calculation of EPS for the Year Ended December 31, 2021

This question requires the calculation of EPS for the year 2021, and restating the EPS for the year 2020 using a rights issue adjustment.

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FA – May 2014 – L1 – SA – Q9 – Accounting Concepts

Determines the value of a rights issue for Opa Limited.

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FA – Nov 2013 – L1 – SB – Q5 – Partnership Accounts

Preparation of journal entries for share issue, forfeiture, and reissue transactions.

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FA – Nov 2015 – L1 – SB – Q4 – Financial Statements Preparation

Determine total acquisition cost and prepare journals for share issue transactions.

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FA – May 2018 – L1 – SA – Q12 – Elements of Financial Statements

Determines the number of shares based on authorized share capital in a company’s memorandum of association.

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BMF – Nov 2021 – L1 – SA – Q9 – The Business Environment

Question on share capital requirements for private companies according to CAMA 2020.

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FA – May 2021 – L1 – SA – Q18 – Financial Statements Preparation

Calculate total dividends paid based on shares and declared dividend per share.

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FA – May 2017 – L1 – SA – Q13 – Elements of Financial Statements

Identifies components of equity in financial statements.

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FA – Mar/July 2020 – L1 – SB – Q4b -Financial Statements

Preparing share capital and related accounts based on a share issue.

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FA – Mar/July 2020 – L1 – SB – Q4a – Financial Statements

Explaining share premium and its five uses.

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FA – Mar/July 2020 – L1 – SA – Q13 – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Correct journal entry for share capital and share premium

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PT – Dec 2023 – L2 – Q4a – Corporate Tax Liabilities

Explanation of the tax implications of transferring retained earnings to share capital, including deemed dividend tax and stamp duty.

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BCL – Apr 2022 – L1 – Q3b – Types of capital and the financing of companies

Suggest financing methods for AirQuick Ghana office and explain advantages and disadvantages of each method.

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