chapter 12

Chapter 12 - Objectives Chapter 12 Stockholders Equity Professor Dominica Lee September 2005 1 2 3 ACY1111 D Lee 2005-2006 Corporation

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1 Chapter 12 Stockholders’ Equity Professor Dominica Lee September 2005 2 ACY1111 D. Lee 2005-2006 Objectives: 1. Corporation characteristics 2. Stockholders’ Equity: (A) Paid-in Capital: - Stockholders’ rights - Types of stocks - issuance of shares - treasury stock (B) Retained Earnings - Dividends: (a) Cash dividends (b) Stock dividends 3. Stock splits 3 ACY1111 D. Lee 2005-2006 Characteristics of a Corporation 1. Separate legal entity 2. Continuous life and transferability of ownership 3. No mutual agency 4. Limited liability of stockholders 5. Separation of ownership and management 6. Corporate taxation 7. Government regulation 8. Ability to raise more capital 4 ACY1111 D. Lee 2005-2006 Stockholders’ Equity (A) Paid-in (contributed) capital (B) Retained earnings (earned capital) 5 ACY1111 D. Lee 2005-2006 (A) Paid-in capital Stockholders’ Rights 1. Vote 2. Dividends 3. Receive a proportionate share of assets remaining upon liquidation 4. Preemptive right Types of Stock: - Common stock and preferred stock - Par value and no-par stock 6 ACY1111 D. Lee 2005-2006 (A) Paid-in capital (Cont’d) Issuance of Shares: (1) Issue at par: Cash xx Common (Preferred) Stock (at par value) xx (2) Issue at premium: Cash xx Common (Preferred) Stock (at par value xx or stated value) Paid-in Capital in Excess of Par-Common xx (Preferred) (or Paid-in Capital in Excess of Stated Value–Common)
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2 7 ACY1111 D. Lee 2005-2006 (A) Paid-in capital (Cont’d) Issuance of Shares (cont’d): (3) Issue of no-par stock: Cash xx Common (Preferred) Stock xx (4) Issue for non-cash assets: Assets (e.g. Land) xx Common (Preferred) Stock (at par) xx Paid-in Capital in Excess of Par xx The fair market value is the fair market of the shares
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This note was uploaded on 11/26/2010 for the course BA ACY1111/2 taught by Professor C during the Spring '09 term at CUHK.

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Chapter 12 - Objectives Chapter 12 Stockholders Equity Professor Dominica Lee September 2005 1 2 3 ACY1111 D Lee 2005-2006 Corporation

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