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6.2 ACIS211_Week_6_Lecture_2_Capital_Disclosures

6.2 ACIS211_Week_6_Lecture_2_Capital_Disclosures - Where a...

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    ACIS211 Week 6 Lecture 2
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    Unpaid capital classifications Where a share is issued any unpaid portion can be: Equity receivable Meets definition of asset Uncalled capital Does not meet definition of asset
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    Unpaid capital classifications Different accounting treatments Equity receivable Dr Equity receivable (asset account) Cr Contributed capital (equity account) Uncalled capital Does not meet definition of asset – therefore only disclosed in the notes
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    Deferred settlement Where settlement of capital is deferred, issue of present value of future cash flows arises Dr Equity receivable Cr Contributed capital (value of future cash flows at todays value) Dr Equity receivable Cr Interest revenue (at implied market rate of interest) Dr Cash Cr Equity receivable Cr Interest revenue
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    13-5 Different Classes of Shares Ordinary shares Provide a claim against the entity that ranks behind the claims of creditors and some preference shareholders Confer voting rights on shareholders Entitle their owners to distribution of profits in the form of dividends Entail, however, no guarantee of dividends If dividends not paid in one year, do not accrue the right to dividends until dividends are paid
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    13-6 Different Classes of Shares Preference shares
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