ch 15 owner's equity

ch 15 owner's equity - CH 15 STOCKHOLDERS EQUITY I General...

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1 CH. 15 STOCKHOLDERS' EQUITY: I. General Information. 1. NATURE OF STOCKHOLDERS' EQUITY. - THE STOCKHOLDERS' INTEREST IN A FIRM IS A RESIDUAL INTEREST. - = THE ASSETS - THE LIABILITIES. 2. Sources of equity. - PAID-IN CAPITAL: STOCKHOLDERS' INVESTMENT. - Retained Earnings: Earned capitals. 3. INFLUENCE OF STATE CORPORATE LAW. - EACH STATE HAS ITS OWN BUSINESS CORPORATION ACT AND THESE ACTS ARE COMPLEX AND VARY IN THEIR PROVISIONS AND DEFINITIONS. 4. CAPITAL STOCK OR SHARE SYSTEM: EACH SHARE REPRESENTS AN OWNERSHIP RIGHT WITH THE FOLLOWING PRIVILEGES. - TO SHARE PROPORTIONATELY IN PROFITS AND LOSSES. - TO SHARE PROPORTIONATELY IN MANAGEMENT (VOTING RIGHT). - To share PROPORTIONATELY IN CORPORATE ASSETS UPON LIQUIDATION. - To SHARE PROPORTIONATELY IN ANY NEW ISSUES OF STOCK OF THE SAME CLASS (CALLED THE PREEMPTIVE RIGHT): THIS RIGHT PROTECTS AN EXISTING STOCKHOLDER FROM INVOLUNTARY DILUTION OF OWNERSHIP INTEREST. 5. VARIETY OF OWNERSHIP INTERESTS. - COMMON STOCK; THE RESIDUAL CORPORATE INTEREST THAT BEARS THE ULTIMATE RISKS AND RECEIVES THE BENEFITS. - REFERRED STOCK : PREFERENCES TO EARNINGS AND THE ASSETS UPON LIQUIDATION. BUT DO NOT HAVE VOTING RIGHT. - DIFFERENT CLASSES OF COMMON STOCK WHICH MAY DIFFER IN VOTING RIGHT. 6. LIMITED LIABILITY OF STOCKHOLDERS. - STOCKHOLDERS CAN NOT LOSE MORE THAN THEIR INVESTMENT. - IF STOCK IS ISSUED BELOW PAR, A CONTINGENT LIABILITY EXISTS FOR THE ORIGINAL CERTIFICATE HOLDER TO THE CREDITOR AT THE TIME OF DISSOLUTION. 7. FORMALITY OF PROFIT DISTRIBUTION. - NO AMOUNTS MAY BE DISTRIBUTED AMONG THE OWNERS UNLESS CORPORATE CAPITAL IS MAINTAINED INTACT. - SUCH DISTRIBUTIONS MUST BE FORMALLY APPROVED BY THE BOARD OF DIRECTORS. - DIVIDENDS MUST BE IN FULL AGREEMENT WITH CONTRACTS AS TO PREFERENCES, PARTICIPATION, ETC.
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II. ACCOUNTING FOR THE ISSUANCE OF STOCK. 1. PAR VALUE STOCK. - PREFERRED STOCK OR COMMON STOCK: REFLECT THE PAR VALUE. - PAID-IN CAPITAL IN EXCESS OF PAR: REFLECT ANY EXCESS OVER PAR (CREDIT) OR DISCOUNT FROM THE PAR (DEBIT). AT PREMIUM ISSUANCE, FOR EXAMPLE, ISSUE $300,000 COMMON STOCK FOR $400,000, CASH 400,000 COMMON STOCK 300,000 PAID-IN CAPITAL IN EXCESS OF PAR 100,000 AT DISCOUNT ISSUANCE, FOR EXAMPLE, ISSUE $300,000 COMMON STOCK FOR $250,000, CASH 250,000 PAID-IN CAPITAL IN EXCESS OF PAR 50,000 COMMON STOCK 300,000 2. NO-PAR STOCK. CASH XXX COMMON STOCK-- NO-PAR VALUE XXX IF THERE IS A STATED VALUE ASSIGNED BY THE BOARD OF DIRECTORS. FOR EXAMPLE, ISSUE NO-PAR COMMON STOCK FOR $240,000 WHOSE STATED VALUE IS $150,000, CASH 240,000 COMMON STOCK 150,000 PAID-IN CAPITAL IN EXCESS OF PAR 90,000 3. SALES ON A SUBSCRIPTION BASIS. - A PARTIAL PAYMENT IS RECEIVED ORIGINALLY AND THE STOCK IS NOT ISSUED UNTIL THE FULL SUBSCRIPTION PRICE IS RECEIVED. - INDIVIDUALS WHO HAVE SIGNED A VALID SUBSCRIPTION CONTRACT
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ch 15 owner's equity - CH 15 STOCKHOLDERS EQUITY I General...

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