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Share Holders Equity

Stockholders' Equity -(or Shareholders' / Owners' Equity), is the owners' claim to the net assets of a corporation. Generally presented on the B/S as the last major section.
Capital Stock -(or legal capital) is the amount of capital that must be retained by the corporation for the protection of creditors. Includes preferred and common stock. PAR Amount received over par goes to APIC.
Common S/E Formula Total shareholders' equity - Preferred stock outstanding (at greater of call price or par value)
APIC -Generally contributed capital in excess of par or stated value. Can also arise from many different types of transactions*, may be aggregated and shown as one amount on the B/S.
Retained Earnings -Accumulated earnings (or losses) that have not been paid out as dividends. Reduced by distributions to stockholders and transfers to APIC for stock dividends. Doesn't include treasury stock or AOCI.
Classifications of R/E's (Appropriations) -May be classified as appropriated or unappropriated. Appropriated: some of RE unavailable to pay dividends due to legal or contractual reasons or at mgmt discretion for contingency
Quasi-Reorganization -(corporate readjustment)revises the capital structure as if legal reorganization happened.approval from shareholders. 1.Restates overvalued assets to FV's (reduces future depreciation); eliminate a R/E's deficit.
AOCI (PUFER) -Include pension adjustments, unrealized gains and losses on AFS securities, foreign currency translation adjustments, deferred gains and losses on the effective portion of CF hedges, and revalution surpluses (IFRS only).
Treasury Stock -Corporation's own stock that has been reacquired. -Portion of R/E's equal to cost of treasury stock may be restricted and may not be used as basis for declaration and payment of dividends (depending on state law).
Cost Method -Required by IFRS and used by GAAP com -Treasury shares are recorded at carried at their reacquisition cost. Gain or loss determined when stock is reissued or retired.
Legal (or Par / Stated Value) Method -Prohibited by IFRS, used by GAAP -Treasury shares recorded at PAR, difference above or under original price recorded to APIC, remainder to RE and CAsh.
Retirement of Treasury Stock -When price paid in excess of the par, the excess charged to APIC to extent it exist, otherwise to retained earnings.
Donated Stock -A company's own stock received as a donation from a shareholder. No change in total S/E as a result of donation but the # of shares outstanding decreases, resulting in higher BV per common share.
Accounting for a Stock Issuance (to Non-Employees) 1. Stock Issued Above Par Value: d) cash c) CS or PS @ par c)APIC for excess over par value. 2. Stock Issued Below Par Value: d)APIC (reflects discount on the stock- contingent liability to the original owners).
Subscriptions 1. Sale: d.)subscriptions receivable c) capital stock subscribed and APIC. Subscriptions not paid are a contra-equity item, offsetting the amount of par and APIC re subscriptions 2. Collection: c.)subscription receivable is credited d.)cash/other assets.
Stock Rights - Right to to buy additional shares. Right usually carries a price below the stock's market price on the date the rights are granted. -Issuance of stock rights - memo entry only.
Other Stock Valuation Issues -Stock issued for outside services _FMV.
Dividends Declared Dividends Paid d.) RE, c.) Dividend Payable Liability is created (dividends payable) d.) Dividend Payable c.) Cash
Types of Dividends 1. Cash: distribute cash to shareholders and 2. Property (In-Kind) 3. Stock
IFRS vs. GAAP- Dividends -IFRS and SEC require public entities to present dividends per share and in total for each class of shares.
Stock Dividends -Distribute additional shares of a company's own stock to its shareholders. No dividend income reported by shareholder, cost basis goes down. 1. Small Stock Dividend (< 20-25%): d.)RE for FMV 2. Large Dividend (> 20-25%) d.) RE for par value.
Stock Dividends on T/S -Generally not distributed b/c not considered outstanding. Exception is made when state law requires that T/S be protected from dilution or
Stock Splits -Occur when a corporation issues additional shares of its own stock (w/ out charge) to current shareholders. Reduces par value per share proportionately. No change in the total RE or APIC. memo entry.
Compensatory Stock Option / Purchase Plans -Valued at the FV of the options issued. 1. Option (Exercise) Price: price at which the underling stock can be purchased pursuant to the option contract. 2. Exercise Date: date by which the option holder must use the option to purchase underlying stock
Statement of Changes in S/E -Provides specific info about changes in an entity's primary equity components, including capital transactions and distributions to shareholders, reconciliation of R/E's.
IFRS vs. GAAP -GAAP permits the presentation of the statement of changes in S/E either as a primary F/S or w/in the notes f/s
Created by: tsp7c
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