F7M1 Flashcards
stockholder’s equity
owner’s claim to the net assets
residual claim on ‘net assets’
Legal capital
common stock and preferred stock
Earned capital
retained earnings
Contributed capital
CS
PS
RE
APIC
Capital stock
legal capital, retained by the corproation for the protection of creditors
Par value
common stock listed with par value, preferred stock is not
Authorized
stock that may be legally issued
common stock
basic ownership in a corporation; right to vote; last in line during bankruptsy
NOT guaranteed dividends
Common Shareholder’s equity
Total Shareholders equity (A-L)
MINUS: PS
MINUS: PS dividends
Shareholder’s equity calculation
asset - liabilities
Book value per common share
common shareholder’s equity / outstanding shares
Preferred stock
preferences related to dividends
no voting right
preference in liquidation
Cumulative preferred stock
dividends in arrears
dividends accumulate
not a legal liability
Noncumulative preferred stock
does NOT accumulate dividends
Participating preferred stock
share equally and then pro rata with common stock
Converitble preferred stock
at the option of the shareholder
callable (redeemable) preferred stock
at the option of the corporation
Mandatory preferred stock
liability not shareholder’s equity
APIC
generally contributed cpaital in excess of par or stated value
could also include sale of TS, liquidiating dividends, conversion of bonds, or small stock dividends
retained earnings
earned stockholder’s equity
accumulated earnings during the life of the corporation that has not been paid out in dividends
Formula for RE
NI
- dividends DECLARED
+/- prior period adjustments
+/- accounting changes retro
Appropriations of RE
revenue restricted for legal/contractual/contingent reasons
reversed after the appropriation has occured
JE for appropriation of RE
DOES NOT CHANGE TOTAL RE
DR: RE (unappropriated)
CR: RE (appropriated)
OCI
not entered into RE
Treasury stock
reduces equity; corproation buying back their own stock
either cost or par method
Gains and losses treasury stock
gain makes APIC go up
losses reduce APIC until it hits 0, then begins hitting RE
Adjustments of treasury stock
direct adjustment to equity and NOT included in net income
cost method
treasury stock
recorded at the buy back costs
Par method
treasury stock
recorded at par value
g/l recognized immediately
If the treasury stock was breing retired
replace cash with common stock
