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Unformatted text preview: 740 C H A P T E R 15 STOCKHOLDERS’ EQUITY LEARNING OBJECTIVES After studying this chapter, you should be able to: Discuss the characteristics of the corporate form of organization. Identify the key components of stockholders’ equity. Explain the accounting procedures for issuing shares of stock. Describe the accounting for treasury stock. Explain the accounting for and reporting of preferred stock. Describe the policies used in distributing dividends. Identify the various forms of dividend distributions. Explain the accounting for small and large stock dividends, and for stock splits. Indicate how to present and analyze stockholders’ equity. • 9 • 8 • 7 • 6 • 5 • 4 • 3 • 2 • 1 As mentioned earlier, we are moving rapidly toward one set of global financial reporting standards and one “common language” for financial information. This change will probably lead to more consolidation of our capital markets. To understand how quickly the global financial world is changing, let’s examine a few trends occurring on stock exchanges around the world. In 2007 the New York Stock Exchange (NYSE) merged with Paris-based Eurotext, cre- ating the world’s first transatlantic stock exchange. NYSE Eurotext is the world’s largest exchange group, with 4,000 listed issuers representing over $29 trillion in market value. Similarly, NASDAQ, the world’s largest electronic stock market, merged with OMX, the Nordic stock market operator. This electronic exchange will operate in 29 countries, on six conti- nents, and will have 4,000 listed issuers, with a market value of approximately $5.5 trillion. Another reason behind the strong impetus for international financial reporting standards can be found in recent initial public offerings (IPOs). The emerging markets are driving the global IPO market. As shown in the following table, in the first three months of 2008, only one of the ten top IPOs occurred on the NYSE. It’s a Global Market PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark As another example, Brazil, Russia, India, and China—often referred to as the BRIC countries —generated 41 per- cent of total IPO proceeds in 2007, compared with just 14 percent for the BRIC countries in 2004. Finally, consider the international sales of some of the largest U.S. corporations: General Electric now has ap- proximately 50 percent of its sales overseas, Boeing in a recent year sold more planes overseas than in the United States, and Ford Motor Company ’s sales would be much less except for success in the European market. Source : Ernst and Young, Growth During Economic Uncertainty: Global IPO Trends Report (2008)....
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