Problem: 1 Conceptual Framework
One of the well-known soccer clubs in Australia, Sydney, has made a decision to include its players on the club’s statement of financial position as assets. These players are signed to the club every 3 years and are paid large amounts of money by the club each year under various contracts. The club also insists on a substantial transfer fee being paid if a player wishes to go to another club while under contract.
Discuss whether the Sydney club is justified in its action of treating players as assets with reference to relevant paragraphs of AASB Framework
On 1 July 2006, Goela Ltd was registered and offered 1 000 000 ordinary shares to the public at an issue price of $1.70, payable as follows:
50c on application (due 31 August)
70c on allotment (due 30 September)
Balance on final call
The issue was underwritten at a commission of $5 000, with a maximum uptake of 200 000 shares. During the financial year the following events occurred:
• By 31 August 2006, applications had been received for 1 000 000 ordinary shares of which applicants for 200 000 shares forwarded the full $1.70 per share, the remainder paying only the application money.
• At a directors' meeting on 1 September 2006, as enough shares had been applied for, the full 1 000 000 shares were issued, with excess monies going to allotment and application.
• By 30 September 2006 all outstanding monies has been received. Other share issue costs amounting to $7000 were also paid on 30 September 2006 along with the underpreparer’s commission.
• As the company had done very well in its first six months, on the 3rd of January 2007 the directors declared and paid an interim dividend of 5cents per share.
• The final call was made on 1 March 2007 with money due by 31 March 2007. All money was received on the due date except for the holder of 20 000 shares who failed to meet the final call. On 7 April 2007, as provided for in the constitution, the directors decided to forfeit these shares. They were reissued, on 15 April 2007, as paid to $1.70 for $1.50 cash. The balance of the Forfeited Shares account was returned to the former shareholder on 16 April 2007.
• On the 30th of June 2007, the company directors declared a final dividend of 10c per share, in line with the company’s constitution this does not need to be confirmed at the AGM by the shareholders of the company.
Prepare general journal entries to record the above data for Goela Ltd