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Define A Corporation.: Activity For Module 7

The document discusses key concepts related to corporations including: 1. A corporation is a legal entity created by law that has rights like succession and powers authorized by its charter. 2. Corporations are organized by filing Articles of Incorporation that specify details like the corporate name, purpose, directors, capital structure, and more. 3. Organization costs are accounting expenses that are recognized immediately, except for share issuance costs which have separate treatment.

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Jeselle Bagsican
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172 views4 pages

Define A Corporation.: Activity For Module 7

The document discusses key concepts related to corporations including: 1. A corporation is a legal entity created by law that has rights like succession and powers authorized by its charter. 2. Corporations are organized by filing Articles of Incorporation that specify details like the corporate name, purpose, directors, capital structure, and more. 3. Organization costs are accounting expenses that are recognized immediately, except for share issuance costs which have separate treatment.

Uploaded by

Jeselle Bagsican
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Activity for Module 7

1. Define a corporation.
A corporation is an artificial being created by operation of law, having the right of
succession and the powers, attributes and properties expressly authorized by law or
incident to its existence.

2. Explain the organization of a corporation.

As it was defined that the corporation is created by operation of law and because of that it
requires the authority and grant from the state and we can’t create a corporation without the
legalities as well as the grant or the licenses from the state.

It states in the Revised Corporation Code that any person, partnership, association or
corporation, simply or jointly with others but not more than fifteen in number may organize a
corporation for any lawful purpose or purposes. Provided, that natural persons who are
licensed to practice a profession and partnerships or associations organized for the purpose of
practicing a profession shall not be allowed to organize as a corporation unless otherwise
provided under special laws.

It’s called One Person Corporation when there is only a single shareholder who must be a
natural person, trust, or an estate. In addition, corporations formed or organized may be stock
or nonstock corporations. When we say stock corporations those which have capital stock
divided into share and all other corporations are called nonstock corporations that do not have
owners represented by shares of stock.

3. What are the contents of Articles of Incorporation?

a) The name of the corporation 


b) The purpose or purposes for which the corporation is formed. 
c) The place where the principal office of the corporation is to be established or located
which place must be within the Philippines. 
d) The term of existence if the corporation has not elected perpetual existence. 
e) The names, nationalities and residence addresses of the incorporators. 
f) The number of directors which shall be more than fifteen or the number of trustees
which may be more than fifteen.
g) The names, nationalities and residence address of persons who shall act as directors
until the first regular directors are duly elected. 
If it be a stock corporation, the amount of authorized capital stock, and the number of
shares into which it is divided, the par value of each share, names, nationalities and
residence addresses of original subscribers, amount subscribed and paid by each on the
subscription. 

h) If the share has no par value, the Articles need state only the number of shares but the
fact that the shares is without par value shall be stated therein. 
i) If it be a nonstock corporation, the amount of its capital, the names, nationalities and
residence address of the contributors and amount contributed by each. 
j) Such other matters consistent with law and which the incorporators may deem
necessary and convenient. 

4. What are bylaws?

Bylaws are legal documents that outline the rules of action, regulations and guidelines
adopted by the corporation for its internal government and for the government of its officers,
shareholders or members.

5. Distinguish between:

a. Corporators and incorporators

Incorporators are stockholders or members stated in the articles of incorporation.


Under corporation law. They are the original owner who form and compose the corporation.
They are the one who signs the necessary documents like security and exchange commission
bylaws and documents needed to operate the business. While the corporators are those who
comprise the corporation like stockholders or members. Each of them has the right to do
something on what is good for the business.  

b. Shareholders and members

A shareholder is a person who buys and holds shares in a company having a share capital. They
become a member once their name is entered on the register of members. Shareholders are
also sometimes called a company's owners because the profits of the company are shared with
them. While members. On the other hand, a member is one of the company’s owners whose
name has been entered on the register of members. Members are corporators of a nonstock
corporation.
6. Explain the following:

a. Minute book

Minute book contains the minutes of the meetings of the directors and shareholders.
This is a collection of all important corporate records, including the articles of incorporation,
which the corporation’s shareholders and creditors can access. A minute book may be a
physical binder containing all of the required documents, or your corporation may choose to
keep their corporate minute book online for easy sharing.

b. Stock and transfer book

The stock and transfer book, is the registry of ownership in a corporation. It is the
quintessential record of all stockholders and their corresponding stockholdings in the
corporation. It contains a record of the names of shareholders, installments paid and unpaid
by shareholders and dates of payment, any transfer of share and dates thereof, by whom and
to whom made. 

c. Books of accounts

It represents the record of all business transactions. The books of accounts include normally the
journal that is used to record economic transaction chronologically and the ledger that is used
to classify economic activities according to nature.

d. Subscription book

Is the book of printed blank subscription or a book containing a list of subscribers.

e. Shareholders’ ledger

This is the subsidiary for the share capital issued reporting the number of shares issued to each
shareholder.  This is one of the records that a corporation must keep. As its name suggests, it is
simply a record listing information about the corporate shares.

f. Subscribers’ ledger

a subsidiary for the subscriptions receivable account reporting the individual subscription of the
subscribers. 

g. Share certificate book

The book of printed blank share certificates written document which serves as a legal
proof of a shareholder's ownership of shares in a company.
7. What is the accounting treatment of organization cost?

PAS 38, paragraph 69, provides that start up costs which include legal and secretarial costs in
establishing a legal entity shall be recognized as expense when incurred. 

Accordingly, it is now clearcut that organization cost shall be expressed immediately with the
exception of share issuance costs which will be discussed later.

8. What are the elements that constitute the shareholders’ equity and their equivalent IFRS
term?

Philippine term IAS term


Capital stock Share capital
Subscribed capital stock Subscribed share capital
Common stock Ordinary share capital
Preferred stock Preference share capital
Additional paid in capital Share premium
Retained earnings (deficit) Accumulated profits (losses)
Retained earnings Appropriation reserve
appropriated
Revaluation surplus Revaluation reserve
Treasury stock Treasury share

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