CLASSROOM EXERCISES ON BOOK VALUE PER SHARE

Problem 1 – One class of share

Slade Co. shows the following balances in its shareholders’ equity on Dec. 31, 2019

Ordinary shares, P20 par 20,000,000

Share premium – original issuance 50,000,000
Share premium – share options 8,000,000
Retained earnings – 30,000,000
unappropriated
Retained earnings – appropriated 10,000,000
Revaluation surplus 2,000,000
Unrealized loss – FAFVOCI (5,000,000)

Compute for Slade’s book value per share on Dec. 31, 2019.

Problem 2 – Different types of preference share

The shareholders’ equity of Gravity Corp. on Dec. 31, 2019 shows the following balances:

8% Preference share, P50 par 2,000,000

Ordinary shares, P20 par 8,000,000
Share premium 16,000,000
Retained earnings 24,000,000

Dividends were last paid in 2016.

Compute the book value per preference and ordinary share of Gravity provided the given independent
cases regarding its preference shares.

1. Noncumulative and nonparticipating

2. Cumulative and nonparticipating
3. Noncumulative and participating
4. Cumulative and participating
5. Cumulative and participating up to 15%
6. Cumulative, participating, and having a liquidation value of P80

Problem 3 – With treasury shares

The shareholders’ equity of Han Inc. on Dec. 31, 2019 has the following balances:

10% preference shares, P100 par 5,000,000

Ordinary shares, P50 par 6,000,000
Share premium 7,000,000
Retained earnings 8,000,000
Treasury shares (20,000 ordinary shares) (1,800,000)

The preference shares are cumulative, and each preference share has a liquidation value of P120.
Dividends were last declared in 2017. The treasury shares were originally issued for P80 per share.
1. Compute for the book value per preference and ordinary share of Han on Dec. 31, 2019.
2. Suppose the treasury shares have a cost of P800,000, instead of P1,800,000. Compute for the book
value per preference and ordinary share of Han on Dec. 31, 2019.

Problem 4 – With subscription receivable

The shareholders’ equity of Tilt Co. on Dec. 31, 2019 has the following balances:

6% Preference shares, P10 par 1,500,000

Ordinary shares, P5 par 6,500,000
Share premium 8,000,000
Retained earnings 12,000,000
Subscription receivable – preference (200,000)
Subscription receivable – ordinary (300,000)
Subscribed preference shares 500,000
Subscribed ordinary shares 1,500,000

Compute for the book value per preference and ordinary share on Dec. 31, 2019.

Problem 5 – With deficit

The following accounts were taken from the records of Tendu Corp. on Dec. 31, 2019:

12% Preference shares, P50

4,000,000
par
Ordinary shares, P20 par 6,000,000
Retained earnings (3,000,000)

Dividends were last paid in 2016.

Compute for the book value per preference and ordinary share on Dec. 31, 2019 given the following
independent cases:

1. Preference shares have a preference as to dividends.

2. Preference shares have a preference as to assets.
Problem 6 - Comprehensive
The following data were taken from Releve Inc. on Dec. 31, 2019:

12% Preference shares, P100 par, P120 liquidation

1,500,000
value
8% Preference shares, P50 par, P60 liquidation value 2,200,000
Ordinary shares, P20 par 3,600,000
Subscribed 12% Preference shares 700,000
Subscribed 8% Preference shares 200,000
Subscribed ordinary shares 600,000
Share premium 18,000,000
Retained earnings 12,000,000
Subscription receivable – 12% preference shares (900,000)
Subscription receivable – 8% preference shares (100,000)
Subscription receivable – ordinary shares (400,000)
Treasury shares – 12% preference shares (2,000
(280,000)
shares)
Treasury shares – 8% preference shares (8,000 shares) (320,000)
Treasury shares – ordinary (10,000 shares) (200,000)

The preference shares are cumulative and fully participating. Dividends were last paid in 2016.

Compute for the book value per each class of preference share and ordinary share of Releve on Dec. 31,
2019.

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