Chapter 18 Study Notes Flashcards
When issuing shares as consideration they should be valued at
Fair value
comprehensive income
total nonowner change in equity for a reporting period.
includes;
1. net holding gains(losses) on investments
2. Gains(losses) from and amendments to postretirement benefit plans
3. Deferred gains (losses) on derivatives
4.Gains(losses) from foreign currency translation
Accumulated other comprehensive income
Cumulative basis of OCI on the balance sheet, reported in two components
- components of comp inc created during the current period
- comprehensive income accumulated over the current and prior periods
statement of shareholders equity
reports the transactions that cause changes in its shareholders equity account balances
paid in capital
consists primarily of amounts invested by shareholders when they purchase shares of stock from the coporation
Comprehensive Income
shows total non owner change in equity for a reporting period
also includes other income not reported in the income statements:
net holding gains/losses
gains/losses from and amendments to post-retirement benefit plans
Deferred gains/losses on derivatives
gains/losses from foreign currency translation
accumulated other comprehensive income(AOCI)
OCI reported periodically on the balance sheet
corporations
have limited liability,
ease of raising capital
more paperwork
double taxation
not for profit organizations may be owned by
- the public sector
2. by a governmental unit
corporations for profit may be
- publicly held and trade:
2 privately held
SCorp
has the characteristic of both a corporation and a partnership
limited liability company
owners are not liable for the debts of the business, except to the extent of their business
limited liability partnership
similar to a LLC but it doesn’t offer the same protection
articles of incorporation
describe
a. the nature of the firm’s business activities
b. the shares to be issued
c. the composition of the initial board of directors
common shareholder rights
the right to vote on matters that come before the shareholders,
b. the right to share profits when dividends are declared.
c. the right to share in the distribution of assets if the company is liquidated
sometimes they also receive a preemptive right or the right to retain ones ownership percentage, is more uncommon
preferred shares
receive dividends before common also have a preference when assets are distributed in the event of liquidation
right of conversion
allows the shares to be converted into common
redemption privilege
the right to redeem shares for cash
cumulative
if a preferred share is cumulative it means that before any dividends are paid to common then the div. from previous years must be caught up before they pay the common shareholders
shares that are redeemable by mandate are classified as liabilities
if they have to buy them back then it is debt
Common stock is valued at
par value
JE
Cash 1000
Common Stock 100
Paid in Cap 900when property is exchanged for stocks the property is valued at
fair value
share issue costs
are subtracted from the cash and the PIC
retire stock
to buy it back for cash and get rid of the share
reduces the amount in common stock and PIC
treasury stock
recorded at cost - par
shares repurchased and not retired
share repurchase is debited to the extent of a credit balance in PIC then RE
payments made to retire shares are
viewed as distribution of property
deficit
a debit in RE
dividend
cash
liquidating dividend
a dividend that takes out of the invested capital
date of record
registered stock owners are entitled to receive a dividend on this date
ex dividend date
date cut off that a shareholder must have the share to receive the dividend
property dividend
non cash distribution
before giving dividend the property must be written up to fair value
stock dividend
distribution of additional shares
RE
Comm Stock
PIC
stock split
a large stock dividend
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