F7/M5 Stockholders Equity: part 1 Flashcards
Capital Stock (Legal stock)
Preferred stock
Common stock
Contributed Capital
Capital stock (Legal stock)
&
APIC
Cost of shares in equity
Contra-equity
Capital Stock (Legal stock)
Amount of capital that must be retained by the corporation for the protection of creditors
Preferred shares must have a par value, common does not
True
Must disclose amount of shares authorized, issued, and outstanding
True
*** Calculate Common SE for “Book value per common share” calculation
Total SE
(-) Preferred Dividends in arrears
(-) Preferred Stock Outstanding
Common SE
Book Value per Common Share
Common SE
(/)
Common Shares Outstanding
Cumulative Preferred Stock
- Dividends in arrears is NOT a liability
- Only a liability if declared
- Must be disclosed
Participating Preferred Stock
Preferred shareholders share (participate) with Common shareholders in dividends in excess of a specific amount. Participation may be full or participating.
FULL Participating Preferred Stock
Preferred shareholders share in excess of their first dividend without limit
- Give Preferred their share of dividends in arrears
- Give CS the same % that Preferred shareholders were given
- The remaining is divided by the relative amount of shares outstanding for each class of stock
PARTIAL Participating Preferred Stock
Preferred shareholders share in excess dividends with common shareholders to a limit
Convertible preferred stock
Able to exchange for common stock
- Complex capital structure
- Basic and Diluted EPS
- Option to convert is held by shareholder
Callable (Redeemable) Preferred Stock
- Redeemable by the corporation
- Disclose on BS
MANDATORY Redeemable Preferred Stock
- LIABILITY
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