F describe the components of shareholders’ equity; Flashcards
Describe the Components of Shareholders Equity
What is shareholders equity?
The residual interest in assets that remains after subtracting liabilities
includes: Contributed Capital(issued capital) preferred stock treasury stock Retained Earnings Non-controlling interest: (Equity of subsidiary, not parent) Accumulated other comprehensive income
Contributed Capital
(issued capital) The amount contributed by the common shareholders
Preferred Stock
- can be classified as debt or equity (depends on terms)
- preferred shareholders earn a fixed return
- Specific dividends expressed as % par value
If the pref. stock calls for ‘mandatory redemption’ in fixed amounts it’s considered a Fin. Liability
Treasury Stock
Stock that has been reacquired by the issuing firm but not yet retired.
-reduces SE
NOT AN INVESTMENT IN THE FIRM
NO VOTING RIGHTS NO DIVIDENDS
Retained Earnings
The undistributed earnings (net income) of the firm since inception, the cumulative earnings that have not been paid out to shareholders as dividends.
Non-controlling interest
(minority interest) = the minority shareholders pro-rata share of the net assets (equity) of a subsidiary that is not wholly owned by the parent.
Accumulated other comprehensive income
Includes all changes in SE less net income and transactions with sahreholders (issuing stock, reaquiring stock, paying dividends)
Par value
A stated or legal value unrelated to fair value and reported separately in stockholder’s equity
Authorized shares
the # of shares a firm is allowed to sell
Issued shares
Actually sold
Outstanding shares
=issued - (shares that have been reacquired by the firm) aka treasury stock
What are ‘transactions with shareholders?”
Stock issues and requirements and dividends
Comprehensive inc v. accum. inc
Comp included in NI and calced over time
Acc. not included in NI and calced at a point in time
