Chapter 12

Chapter 12 - Chapter 12 Reporting and Interpreting Owners...

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Financial Accounting, Third Canadian Edition 12-1 Chapter 12 Reporting and Interpreting Owners’ Equity
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Financial Accounting, Third Canadian Edition 12-2 Understanding The Business Advantages of a corporation Simple to become an owner Easy to transfer ownership Provides limited liability
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Financial Accounting, Third Canadian Edition 12-3 Own assets Sue and be sued Incur liabilities Enter into contracts Because a corporation is a separate legal entity , it can . . . Understanding The Business
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Financial Accounting, Third Canadian Edition 12-4 Voting (in person or by proxy ) Proportionate distribution of profits Proportionate distribution of assets in a liquidation Rights Shareholders’ Ownership of a Corporation
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Financial Accounting, Third Canadian Edition 12-5 Shareholders (Owners of voting shares) Board of Directors Internal (managers) and External (non-managers) President Vice President (Production) Vice President (Marketing) Vice President (Finance) Vice President (Controller) Appointed by directors Elected by shareholders Ownership of a Corporation
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Financial Accounting, Third Canadian Edition 12-6 The maximum number of shares that can be sold to the public. This is frequently set to an unlimited amount to provide maximum flexibility to the corporation. Authorized Shares Authorized, Issued, and Outstanding Shares
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Financial Accounting, Third Canadian Edition 12-7 Authorized Shares Issued shares are authorized shares that have been sold. Unissued shares are authorized shares that never have been sold. Authorized, Issued, and Outstanding Shares
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Financial Accounting, Third Canadian Edition 12-8 Authorized Shares Unissued Shares Treasury Shares Outstanding Shares Issued Shares Treasury shares are issued shares that have been reacquired by the corporation. In Canada, reacquired shares are usually cancelled. Outstanding shares are issued shares that are owned by shareholders. Authorized, Issued, and Outstanding Shares
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Financial Accounting, Third Canadian Edition 12-9 $2,089,000,000 572,000,000 shares EPS = = $3.65 per share Earnings per share (EPS) Net Income available to common shareholders Average Number of Common Shares Outstanding EPS = Sun Life Great-West Lifeco Fairfax Financial $ 3.65 $ 2.10 $ 12.17 2006 EPS Comparison with Competitors 2004 2005 2006 $ 2.81 $ 3.14 $ 3.65 Sun Life's EPS Comparisons Over Time Sun Life’s income for 2006 is $2,089,000,000 and the average number of shares outstanding is 572,000,000. Earnings per share is probably the single most widely watched financial ratio.
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Financial Accounting, Third Canadian Edition 12-10 Common Shares Preferred Shares Types of Share Capital
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Financial Accounting, Third Canadian Edition 12-11 Basic voting shares Ranks after preferred shares Dividend set by board of directors Common Shares
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Financial Accounting, Third Canadian Edition 12-12 Par Value and No-par Value Shares Legal capital is the amount of capital that must remain invested in the business until it is liquidated.
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This note was uploaded on 10/21/2010 for the course AFM 101 taught by Professor Kennedy during the Winter '08 term at Waterloo.

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Chapter 12 - Chapter 12 Reporting and Interpreting Owners...

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