The Resty Company issued 200,000 new P1 ordinary shares at a fair value of P1.80 each. Resty identified the following costs in relation to the share issue: Professional fees of P40,000. Internal management time in managing the process of P30,000. These costs are deductible in arriving at the entity’s income tax liability. The current rate of tax is 30%. In accordance with PAS32 Financial instruments: presentation, the increase in equity in the statement of financial position of Resty as a result of the transaction will be a. P360,000 b. P332,000 c. P320,000 d. P311,000
The Resty Company issued 200,000 new P1 ordinary shares at a fair value of P1.80 each. Resty identified the following costs in relation to the share issue: Professional fees of P40,000. Internal management time in managing the process of P30,000. These costs are deductible in arriving at the entity’s income tax liability. The current rate of tax is 30%. In accordance with PAS32 Financial instruments: presentation, the increase in equity in the statement of financial position of Resty as a result of the transaction will be a. P360,000 b. P332,000 c. P320,000 d. P311,000
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 1BCRQ
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Question
The Resty Company issued 200,000 new P1 ordinary shares at a fair value of P1.80
each. Resty identified the following costs in relation to the share issue:
Professional fees of P40,000.
Internal management time in managing the process of P30,000.
These costs are deductible in arriving at the entity’s income tax liability. The
current rate of tax is 30%.
In accordance with PAS32 Financial instruments: presentation, the increase in
equity in the
will be
a. P360,000
b. P332,000
c. P320,000
d. P311,000
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