ACC 302 PPt 11

ACC 302 PPt 11 - 1 Equity Financing Learning Objectives 1....

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1 Equity  Equity  Financing Financing
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2 Learning Objectives 1. Identify the rights associated with ownership of common and preferred stock. 2. Record the issuance of stock for cash, on a subscription basis, and in exchange for noncash assets or for services. 3. Use both the cost and par value methods to account for stock repurchases. 4. Account for the issuance of stock rights and stock warrants.
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3 Learning Objectives 5. Explain the difference between the intrinsic value and fair value methods, and use both in accounting for a fixed stock option plan. 6. Distinguish between stock conversions that require a reduction in retained earnings and those that do not. 7. List the factors that impact the retained earnings balance.
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4 Learning Objectives 8. Properly record cash dividends, property dividends, small and large stock dividends, and stock splits. 9. Explain the background of unrealized gains and losses recorded as direct equity adjustments, and list the major types of equity reserves founds in foreign balance sheets. 10. Prepare a statement of changes in stockholders’ equity.
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5 Learning Objectives 11. Eliminate a retained earnings deficit through a quasi-reorganization. 12 . Use both the intrinsic value and fair value methods to account for performance-based stock option plans and plans calling for a cash settlement. EXPANDED MATERIAL
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6 Legal Capital Additional Paid-In Capital Components of Stockholders’ Equity Retained Earnings Contributed Capital Other Stockholders’ Equity
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7 Common Stock The owners of common stock of a corporation can be thought of as the true owners of the business.
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8 Common Stock Unless restricted by terms of the articles of incorporation, the common stockholder has certain basic rights.
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9 The right to vote in the election of directors and in the determination of certain corporate polices such as the management compensation plan or major corporate acquisitions. The right to maintain one’s proportional interest in the corporation through purchase of additional common stock if and when it is issued. Common Stock
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10 Preferred Stock The title “preferred” stock is somewhat misleading. Preferred isn’t better; it’s different.
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11 Preferred stockholders are entitled to receive their full cash dividend before any cash dividend can be issued to common stockholders. If the company goes bankrupt, preferred stockholders are entitled to have their investment repaid in full, before common stockholders receive anything. Preferred Stock The protection enjoyed by preferred stockholders is:
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12 Preferred Stock Cumulative Has the right to receive accumulated dividends before any dividends may be paid to common stockholders. Non- Cumulative Has no right to “passed” dividends.
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This document was uploaded on 06/11/2009.

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ACC 302 PPt 11 - 1 Equity Financing Learning Objectives 1....

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