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AAA Corporation is authorized to issue 5,000 shares of P200 par value ordinary share capital. The following transactions occurred in 2023: Issued 1,500 shares in exchange for a power plant with market value of P500,000. At that time, ordinary shares were selling at P350 per share.Issued 500 shares in exchange for an equipment. The equipment had no determinable value, but ordinary shares were selling at P320 per share at that time.Issued 400 shares for advisory services. The firm billed AAA Corporation for P150,000. At that time, ordinary shares were selling at P325.Issued 750 shares to attorneys in payment for their legal services. The value of the legal services is not determinable but ordinary shares were selling at P330 per share at that time.How much is the total consideration received by AAA Corporation during 2023?

Question

AAA Corporation is authorized to issue 5,000 shares of P200 par value ordinary share capital. The following transactions occurred in 2023: Issued 1,500 shares in exchange for a power plant with market value of P500,000. At that time, ordinary shares were selling at P350 per share.Issued 500 shares in exchange for an equipment. The equipment had no determinable value, but ordinary shares were selling at P320 per share at that time.Issued 400 shares for advisory services. The firm billed AAA Corporation for P150,000. At that time, ordinary shares were selling at P325.Issued 750 shares to attorneys in payment for their legal services. The value of the legal services is not determinable but ordinary shares were selling at P330 per share at that time.How much is the total consideration received by AAA Corporation during 2023?

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Solution 1

To calculate the total consideration received by AAA Corporation during 2023, we need to multiply the number of shares issued by the selling price per share at the time of each transaction.

  1. For the power plant transaction, 1,500 shares were issued at a selling price of P350 per share. So, the consideration for this transaction is 1,500 * P350 = P525,000.

  2. For the equipment transaction, 500 shares were issued at a selling price of P320 per share. So, the consideration for this transaction is 500 * P320 = P160,000.

  3. For the advisory services transaction, 400 shares were issued at a selling price of P325 per share. So, the consideration for this transaction is 400 * P325 = P130,000.

  4. For the legal services transaction, 750 shares were issued at a selling price of P330 per share. So, the consideration for this transaction is 750 * P330 = P247,500.

To find the total consideration received by AAA Corporation during 2023, we add up the consideration for each transaction: P525,000 + P160,000 + P130,000 + P247,500 = P1,062,500.

So, the total consideration received by AAA Corporation during 2023 is P1,062,500.

This problem has been solved

Solution 2

To calculate the total consideration received by AAA Corporation during 2023, we need to multiply the number of shares issued in each transaction by the value of the shares at the time of each transaction.

  1. For the power plant transaction, 1,500 shares were issued at a market value of P350 per share. So, the consideration for this transaction is 1,500 shares * P350/share = P525,000.

  2. For the equipment transaction, 500 shares were issued at a market value of P320 per share. So, the consideration for this transaction is 500 shares * P320/share = P160,000.

  3. For the advisory services transaction, 400 shares were issued at a market value of P325 per share. So, the consideration for this transaction is 400 shares * P325/share = P130,000.

  4. For the legal services transaction, 750 shares were issued at a market value of P330 per share. So, the consideration for this transaction is 750 shares * P330/share = P247,500.

Adding up all these amounts, the total consideration received by AAA Corporation during 2023 is P525,000 + P160,000 + P130,000 + P247,500 = P1,062,500.

This problem has been solved

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