Book Value per Share

Question 1

Book value per share (BVPS) indicates the amount that

Answer 1

each share will receive assuming that the entity’s assets and liabilities are realized at book value.

Question 2

Primary use of BVPS is to indicate whether the

Answer 2

market value of each share is relatively overvalued or undervalued.

Question 3

(T or F) BVPS is not a required disclosure under PFRS.

Answer 3

True

Question 4

(T or F) BVPS Amounts are based on the fair values of assets and liabilities, which may be materially different from their book values.

Answer 4

False (Book Value)

Question 5

(T or F) Some assets and liabilities may not be recorded if they do not meet the recognition criteria under accounting standards.

Answer 5

True

Question 6

In computing BVPS, an entity may apply the following general formula

Answer 6

Book value per share = Adjusted shareholders’ equity ÷ No. of outstanding shares

Question 7

Number of outstanding shares shall be determines as follows:

Answer 7

Outstanding shares = No. of issued shares + No. of subscribed shares - No. of treasury shares

Question 8

Shareholders’ equity shall be adjusted by the following (for treasury shares)

Answer 8

All treasury shares are assumed to be retired. As such, the difference between the cost and part value of treasury shares shall be recorded either in retained earning or share premium

Question 9

Shareholders’ equity shall be adjusted by the following (for subscription receivable)

Answer 9

Subscription receivable shall not reduce shareholders’ equity since these are assumed to be collected during the entity’s hypothetical liquidation for BVPS purposes.

Question 10

If an entity has more than one class of share, the entity shall

Answer 10

calculate for the book value per share for each class of share

Question 11

If an entity has preference shares, the amount assigned to preference shares are as follows

Answer 11

• Par value of preference shares, include subscribed shares, net of preference shares assumed to be retired
• Excess of liquidation value
• Unpaid preference dividend
• If preference is participating, the as if dividends be allocated to preference and ordinary, first based on preference rate, then on pro-rata par value

Question 12

If there multiple type of preference share, the entity shall follow the following relevant rules:

Answer 12

• If only one class of preference shares is participating, its preference dividend rate shall be used initially allocating amounts to ordinary shares.
• Dividend rate of nonparticipating preference shares shall not be used in initially allocating amounts to ordinary shares
• If more than one class of preference shares are participating, the lowest preference dividend rate shall be used in initially allocating amounts to ordinary shares.