所有者权益ch11Stockholders_39;Equity.ppt

,StockholdersEquity,Chapter11,IntermediateAccounting12thEditionKieso,Weygandt,andWarfield,Identifythekeycomponentsofstockholdersequity.Explaintheaccountingforissuingsharesofstock.Describetheaccountingfortreasurystock.Explaintheaccountingforpreferredstock.Identifythevariousformsofdividenddistributions.Explaintheaccountingforsmallandlargestockdividends,andforstocksplits.,LearningObjectives,IssuanceofstockReacquisitionofshares,TheCorporateForm,CorporateCapital,PreferredStock,DividendPolicy,CapitalstockorsharesystemVarietyofownershipinterests,FeaturesAccountingforpreferredstock,dividenddistributionsTypesofdividendsStocksplit,StockholdersEquity,Threeprimaryformsofbusinessorganization,TheCorporateFormofOrganization,Proprietorship,Partnership,Corporation,Specialcharacteristicsofthecorporateform:Influenceofstatecorporatelaw.Useofcapitalstockorsharesystem.Developmentofavarietyofownershipinterests.,StateCorporateLaw,Corporationmustsubmitarticlesofincorporationtothestateinwhichincorporationisdesired.GeneralMotors-incorporatedinDelaware.U.S.Steel-incorporatedinNewJersey.,CapitalStockorShareSystem,Intheabsenceofrestrictiveprovisions,eachsharecarriesthefollowingrights:Toshareproportionatelyinprofitsandlosses.Toshareproportionatelyinmanagement(therighttovotefordirectors).Toshareproportionatelyinassetsuponliquidation.Toshareproportionatelyinanynewissuesofstockofthesameclasscalledthepreemptiveright.,VarietyofOwnershipInterests,Commonstockrepresentsbasicownershipinterest.Bearsultimaterisksofloss.Receivesthebenefitsofsuccess.Notguaranteeddividendsnorassetsupondissolution.,Preferredstockiscreatedbycontract,whenstockholderssacrificecertainrightsinreturnforotherrightsorprivileges,usuallydividendpreference.,ContributedCapital,RetainedEarningsAccount,AdditionalPaid-inCapitalAccount,Less:TreasuryStockAccount,TwoPrimarySourcesofEquity,CorporateCapital,CommonStockAccount,PreferredStockAccount,AssetsLiabilities=Equity,IssuanceofStock,Accountingproblems:Parvaluestock.No-parstock.Stockissuedwithothersecurities.Stockissuedinnoncashtransactions.Costsofissuingstock.,Sharesauthorized-Sharessold-Sharesissued,ParValueStock,Corporationsmaintainaccountsfor:PreferredStockorCommonStock.AdditionalPaid-inCapital,BE15-1:LostVikingsCorporationissued300sharesof$10parvaluecommonstockfor$4,100.PrepareLostVikingsjournalentry.,Cash4,100,Commonstock(300 x$10)3,000,Additionalpaid-incapital1,100,No-ParStock,Reasonsforissuance:Avoidscontingentliability.Avoidsconfusionoverrecordingparvalueversusfairmarketvalue.,Somestatesrequirethatno-parstockhaveastatedvalue.,BE15-2:ShinobiCorporationissued600sharesofno-parcommonstockfor$10,200.PrepareShinobisjournalentryif(a)thestockhasnostatedvalue,and(b)thestockhasastatedvalueof$2pershare.,Cash10,200,Commonstock10,200,Journalentry:,Cash10,200,Commonstock(600 x$2)1,200,Additionalpaid-incapital9,000,a.,b.,StockIssuedwithOtherSecurities,Twomethodsofallocatingproceeds:theproportionalmethodandtheincrementalmethod.,BE15-4:PrimalRageCorporationissued300sharesof$10parvaluecommonstockand100sharesof$50parvaluepreferredstockforalumpsumof$14,200.Thecommonstockhasamarketvalueof$20pershare,andthepreferredstockhasamarketvalueof$90pershare.,Cash14,200,Preferredstock(100 x$50)5,000,Additionalpaid-incapital-preferred3,520,Commonstock(300 x$10)3,000,Additionalpaid-incapital-common2,680,ProportionalMethod,BE15-4:(Variation)PrimalRageCorporationissued300sharesof$10parvaluecommonstockand100sharesof$50parvaluepreferredstockforalumpsumof$14,200.Thecommonstockhasamarketvalueof$20pershare,andthevalueofthepreferredstockisunknown.,Cash14,200,Preferredstock(100 x$50)5,000,Journalentry(Incremental):,Additionalpaid-incapital-preferred3,200,Commonstock(300 x$10)3,000,Additionalpaid-incapital-common3,000,IncrementalMethod,StockIssuedinNoncashTransactions,Thegeneralrule:Companiesshouldrecordstockissuedforservicesorpropertyotherthancashateitherthe:fairvalueofthestockissuedorfairvalueofthenoncashconsiderationreceived,whicheverismoreclearlydeterminable.,Land80,000,Commonstock(24,000 x$1)24,000,April1Issued24,000sharesofcommonstockforland.Theaskingpriceofthelandwas$90,000;thefairmarketvalueofthelandwas$80,000.,Additionalpaid-incapital56,000,E15-2:KathleenBattleCorporationwasorganizedonJanuary1,2007.Itisauthorizedtoissue500,000sharesofnoparcommonstockwithastatedvalueof$1pershare.,Organizationexpense50,000,Commonstock(10,000 x$1)10,000,Aug.1Issued10,000sharesofcommonstocktoattorneysinpaymentoftheirbillof$50,000forservicesrenderedinhelpingthecompanyorganize.,Additionalpaid-incapital40,000,E15-2:KathleenBattleCorporationwasorganizedonJanuary1,2007.Itisauthorizedtoissue500,000sharesofnoparcommonstockwithastatedvalueof$1pershare.,CostsofIssuingStock,Directcostsincurredtosellstock,suchasunderwritingcosts,accountingandlegalfees,printingcosts,andtaxes,shouldbereportedasareductionoftheamountspaidin(additionalpaid-incapital).,ReacquisitionofShares,Corporationspurchasetheiroutstandingstock:Toprovidetax-efficientdistributionsofexcesscashtoshareholders.Toincreaseearningspershareandreturnonequity.Toprovidestockforemployeestockcompensationcontractsortomeetpotentialmergerneeds.Tothwarttakeoverattemptsortoreducethenumberofstockholders.Tomakeamarketinthestock.,PurchaseofTreasuryStock,Twoacceptablemethods:Costmethod(morewidelyused).ParorStatedvaluemethod.Treasurystock,reducesstockholdersequity.,Treasurystock(1,000 x$28)28,000,Cash28,000,Illustration:UCCompanyoriginallyissued15,000sharesof$1par,commonstockfor$25pershare.April1stthecompanyre-acquired1,000sharesfor$28pershare.,SaleofTreasuryStock,AboveCostorBelowCostBothincreasetotalassetsandstockholdersequity.,Cash(500 x$30)15,000,Treasurystock(500 x$28)14,000,Illustration:UCCompanyoriginallyissued15,000sharesof$1par,commonstockfor$25pershare.June1stSold500sharesofitsTreasuryStockfor$30pershare.,Paid-incapitaltreasurystock1,000,Cash(300 x$9)2,700,Treasurystock(300 x$28)8,400,Illustration:UCCompanyoriginallyissued15,000sharesof$1par,commonstockfor$25pershare.Oct.15thSold300sharesofitsTreasuryStockfor$9pershare.,Paid-incapitaltreasurystock1,000,Retainedearnings4,700,Limitedtobalanceonhand,Cash(100 x$11)1,100,Treasurystock(100 x$28)2,800,Illustration:UCCompanyoriginallyissued15,000sharesof$1par,commonstockfor$25pershare.Oct.30thSold100sharesofitsTreasuryStockfor$11pershare.,Retainedearnings1,700,Commonstock(100 x$1)100,Paid-incapitalcommon(100 x$24)2,400,Illustration:UCCompanyoriginallyissued15,000sharesof$1par,commonstockfor$25pershare.Nov.10thRetiredremaining100sharesofitsTreasuryStock.,Treasurystock(100 x$28)2,800,Retainedearnings300,Illustration15-4NoTreasuryStock,Illustration15-5withTreasuryStock,Featuresoftenassociatedwithpreferredstock.Preferenceastodividends.Preferenceastoassetsinliquidation.Convertibleintocommonstock.Callableattheoptionofthecorporation.Nonvoting.,LO5Explaintheaccountingforandreportingofpreferredstock.,PreferredStock,CumulativeParticipatingConvertibleCallableRedeemable,SpecificFeaturesofPreferredStock,Acorporationmayattachwhateverpreferencesorrestrictions,aslongasitdoesnotviolateitsstateincorporationlaw.,Accountingforpreferredstockatissuanceissimilartothatforcommonstock.,DividendPolicy,Dividenddistributionsgenerallyarebasedonaccumulatedprofits(retainedearnings).Fewcompaniespaydividendsinamountsequaltotheirlegallyavailableretainedearnings.Why?Maintainagreementswithcreditors.Meetstateincorporationrequirements.Tofinancegrowthorexpansion.Tosmoothoutdividendpayments.Tobuildupacushionagainstpossiblelosses.,Cashdividends.Propertydividends.Liquidatingdividends.Stockdividends.,TypesofDividends,Dividendsrequireinformationconcerningthreedates:DateofdeclarationDateofrecordDateofpayment,CashDividends,Boardofdirectorsvoteonthedeclarationofcashdividends.Adeclaredcashdividendisaliability.Companiesdonotdeclareorpaycashdividendsontreasurystock.,IllustrationWhatwouldbethejournalentriesmadebyacorporationthatdeclareda$50,000cashdividendonMarch10,payableonApril6toshareholdersofrecordonMarch25?,March10(DeclarationDate),Retainedearnings,50,000,Dividendspayable,50,000,March25(DateofRecord)Noentry,April6(PaymentDate),Dividendspayable,50,000,Cash,50,000,Debit,Credit,PropertyDividends,Dividendspayableinassetsotherthancash.Restateatfairvaluethepropertyitwilldistribute,recognizinganygainorloss.,IllustrationAdividendisdeclaredJan.5thandpaidJan.25th,inbondsheldasaninvestment;thebondshaveabookvalueof$100,000andafairmarketvalueof$135,000.,DateofDeclaration,Investmentinbonds,35,000,Gainoninvestment,35,000,DateofIssuance,Propertydividendpayable,135,000,Investmentinbonds,135,000,Debit,Credit,Retainedearnings,135,000,Propertydividendpayable,135,000,LiquidatingDividends,Dividendnotbasedonearningsreducespaid-incapital.,June1(PaymentDate),April20(DeclarationDate),Retainedearnings,575,000,Additionalpaid-incapital,125,000,Dividendspayable,700,000,Dividendspayable,700,000,Cash,700,000,BE15-12RadicalRexMiningCompanydeclared,onApril20,adividendof$700,000payableonJune1.Ofthisamount,$125,000isareturnofcapital.PreparetheApril20andJune1entriesforRadicalRex.,Issuanceofownstocktostockholdersonaproratabasis,withoutreceivinganyconsideration.Whenstockdividendislessthan2025percentofthecommonsharesoutstanding,companytransfersfairmarketvaluefromretainedearnings(smallstockdividend).,StockDividends,10%stockdividendisdeclared,Retainedearnings,20,000,Commonstockdividenddistributable,500,Debit,Credit,Additionalpaid-incapital,19,500,Stockissued,Commonstockdiv.