CH 15 Class Notes - CHAPTER 15 STOCKHOLDERS EQUITY I...

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CHAPTER 15 – STOCKHOLDERS’ EQUITY I. Sources of Stockholders’ Equity A. Paid-In Capital: B. Retained Earnings: C. Accumulated Other Comprehensive Income: II. Paid-In Capital A. Share Rights 1. Common Stockholder: a. Voting Rights. b. Share in profits when dividends are declared. c. Share in the distribution of assets if the company is liquidated. 2. Preferred Stockholder: a. Dividend and Liquidation preference over common stockholders. b. No voting rights. B. Preferred Stock Features 1. 2. Dividends a. b. c. 3. Redeemable Preferred Stock 1
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C. Accounting for the Issuance of Stock 1. Stock Issued for Cash: 2. Noncash Stock Transactions The transaction should be recorded at the fair value of either the shares or the noncash consideration, whichever is more clearly evident. 3. Share Issue Costs: Legal, printing, and accounting fees necessary to sell shares. 2
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STOCK ISSUED FOR CASH DuMont Chemicals issues 1 million of its common shares, $1 par per share, for $10 per share: ($ in millions) Cash (1,000,000 shares at $10 price per share). ..... 10 Common stock (1,000,000 shares at $1 par). ....... 1 Paid-in capital – excess of par (remainder). .......... 9 3
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STOCK ISSUED FOR NONCASH CONSIDERATION DuMont Chemicals issues 1 million of its common shares, $1 par per share, in exchange for a custom-built factory for which no cash price is available. The current market price of DuMont’s stock is $10 per share: ($ in millions) Property, plant, and equipment (1 million shares at $10) 10 Common stock (1 million shares at $1 par). ............. 1 Paid-in capital – excess of par (remainder). ............. 9 4
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D. Reacquisition of Shares 1. Purposes a. Decrease supply of shares in the market to support price of remaining shares. b. Increase earnings per share. c. To provide stock for stock compensation agreements. 2. Treasury Stock a. b. c. Acquisition of Treasury Stock d. Sale of Treasury Stock Above Cost e. Sale of Treasury Stock Below Cost 5
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PURCHASE OF TREASURY STOCK American Semiconductor’s balance sheet included the following: Stockholders' Equity ($ in millions) Common stock, 100 million shares at $1 par $ 100 Paid-in capital – excess of par. ................. 900
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This note was uploaded on 07/26/2009 for the course ACCT AIM 4332 taught by Professor Tiffanybortz during the Summer '09 term at University of Texas at Dallas, Richardson.

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CH 15 Class Notes - CHAPTER 15 STOCKHOLDERS EQUITY I...

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