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Notes 11 - • Stock dividends and stock splits o Dividends...

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Linking the B/S and the I/S: Stockholders’ Equity, Comprehensive Income, The Equity Method, and Earnings Quality Reporting of comprehensive income: o NI (I/S) + Other Comprehensive Inc./ Loss (B/S) = Comprehensive Income o Where to report this? I/S Separate statement of comprehensive Part of analysis of changes in stockholders’ equity (“bury” it in there, not as much exposure, most companies choose to do this) o Ex. Xerox goes from $230 NI to $(1,446) Comprehensive Loss o Stuff like this hurts financial credibility
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Unformatted text preview: • Stock dividends and stock splits: o Dividends always reduce RE: Cash and stock o Capitalization of RE: o Stock split: No entry required Increase number of shares and decrease par value o Small stock dividend: Transfer market value of stock from RE to capital stock o Large stock dividend: Will affect market price of stock (go down) Transfer par value of stock from RE to capital stock account o Example: Co. has 400,000 shares C/S w/ $1 par and $20 market value…...
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