This document discusses different types of shareholder equity, including: - Book value per share, which is shareholder equity divided by number of shares - Preference shareholder equity divided by preference shares - Ordinary shareholder equity divided by ordinary shares It also defines liquidation value, call price, and different types of preference shares and their dividend rights, such as cumulative, noncumulative, participating, and nonparticipating. The document includes two illustrations calculating book value per share under different shareholder equity structures.

1. CHAPTER 23

2. - the amount that would be
paid on each share assuming
the entity is liquidated and
the amount available to
shareholders is exactly the
amount reported as
shareholder’s equity

3. Total Shareholder’s Equity
Book Value Per Share =
No. of Shares Outstanding

4. Preference Shareholder’s Equity
Book Value Per Share =
No. of Preference Shares Outstanding
Ordinary Shareholder’s Equity
Book Value Per Share =
No. of Ordinary Shares Outstanding

5. Liquidation Value – the amount which the preference shareholders
normally receive upon the liquidation of the
corporation
Call Price – the amount paid to preference shareholders upon
redemption
Preference as to assets – the preference shareholders are entitled to
payment not only for the liquidation value
but also for dividends in arrears
Preference as to dividends – if dividends are declared, the
preference shareholders have the right
to receive dividends first before
the ordinary shareholders are paid a
dividend

6. When preference share has preference as
to dividends, the dividend right may be:
 Noncumulative
 Cumulative
 Nonparticipating
 Participating

7. Illustration 1
Evergreen Company provided the following
shareholders’ equity at year-end:
Share capital, P100 5,000,000
Share premium 1,000,000
Retained Earnings unappropriated 1,500,000
Retained Earnings appropriated 500,000
for contingencies
Revaluation surplus 800,000
REQUIRED: Compute the book value per share

8. Illustration 2
Endless Company provided the following
shareholders’ equity on December 31, 2016:
Preference share capital, 12% P100 par 1,000,000
Ordinary share capital, P100 4,000,000
Share Premium 2,000,000
Retained Earnings 1,000,000
Dividends have been paid on the preference share up to
December 31, 2014.

9. REQUIRED: Compute the book value per ordinary
share and per preference share under of the following
conditions with respect to preference share:
a. Cumulative and fully participating
b. Cumulative and fully participating after
ordinary share receives 15%
c. Cumulative and participating up to 16%
d. Cumulative and nonparticipating
e. Noncumulative and nonparticipating