F7 Flashcards
What are the 5 parts of Stockholders’ Equity?
Capital Stock, APIC, RE, AOCI, T/S
What is included in Capital Stock?
Par value. Authorized, issued, and outstanding. Common Stock. Preferred Stock
How do you calculate common stock?
Total SE – P/S outstanding (@ greater of call price or par value) – Cumulative P/S div in arrears = Common SE
How do you calculate BV per common share?
BV per common share = Common SE / CS outstanding
What is APIC?
Contributed capital in excess of par, sale of T/S @ gain, quasi-reorg, issue liquidating div, conversion of bond, declaration of small stock div
How do you calculate the change in RE?
NI – div declared +/- prior rd adj +/- retrospective accounting change + adj from quasi-reorg = change in RE
How do you classify RE?
unappropriated or appropriated for …
What is a quasi-reorganization?
accounting adjustment, not a legal reorg. Purpose = to restate overvalued A to lower FV (reduce future dep) and eliminate RE deficit
What is treasury stock?
T/S is a debit. Reduces SE. Reacquire/repurchase of stock.
What are the methods to value T/S?
cost (most common) or par
What is the cost method for valuing T/S?
Record/carry T/S @ reacquisition cost. G/L in APIC when reissued or retired.
What is the par method for valuing T/S?
Record/carry T/S @ par value G/L in APIC when reacquired.
What are the dates for dividends?
date of declaration, record, and payment
What is a small stock dividend?
Small < 20-25%… reduce RE by FMV stock
What is a large stock dividend?
Large > 20-25%… reduce RE by par value stock
What are non-compensatory stock options?
GAAP only. No J/E until stock purchased, then regular entry. Most employees are eligible and no discount available.
What are compensatory stock options?
GAAP & IFRS. The compensation expense is allocated over service period. The fair value is an expense to the issuer.
What is the difference between a simple v. complex capital structure?
Simple = C/S outstanding only. (Basic EPS only). Complex = securities can be potentially converted to C/S (Basic & Diluted EPS).
How do you calculate Basic EPS?
Basic EPS = Income available to Common S/H / WACSO
What is income available to common S/H?
NI – PD (preferred dividends)
What is WACSO?
WA of CS Outstanding = Beg shares outstanding + shares sold (time weighted) – shares reacquired (time weighted) + stock dividends & splits (retroactive) – reverse stock splits (retroactive)
How are complex capital structures determined?
must have at least 1: convertible security, warrant or other option, contracts that may be settled in cash/stock, or contingent shares
How do you calculate diluted EPS?
Diluted EPS = income avail to Common S/H + interest on diluted securities / WACSO assuming all diluted securities converted to C/S
Dilutive vs. Antidilutive.
Dilutive: avg price > x price. Antidilutive: avg price < x price.
What are the 3 sections of the Statement of Cash Flows?
Operating Investing Financing
What is included in the operating section of the SCF?
most WC. Operating Assets = all CA except cash. Operating Liabilities = all non-interest bearing liabilities
What is included in the investing section of the SCF?
changes in non-current assets
What is included in the financing section of the SCF?
changes in interest-bearing debt & equity
How is CFO calculated in the direct method?
CFO = Cash received from customers + interest received – interest paid – cash paid to suppliers & employees + dividends received + sales of trading securities – purchases of trading securities – income taxes paid
How do you calculate cash received from customers?
Inflow = revenue + decrease A/R – increase unearned revenue
How do you calculate cash paid to supplier?
Outflow = COGS + increase Inv + decrease A/P
How do you calculate cash paid to employees?
Outflow = Salaries and wages expense + decrease wages payable
How is CFO calculated in the indirect method?
CFO = NI + dep & amort (discount) + losses – gains – amort (premium) – equity earnings + decrease OA + increase OL
