KIC000084 - CHAPTER 11 Reporting and Interpreting...

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CHAPTER 11 Reporting and Interpreting Stockholders' Equity 0iI p.11 Equity vs. Debt Financing l> Advantages of Equity Financing: ~~ .. Does not have to be repaid • Dividends are optional l> Advantages of Debt Financing: • Interest is tax deductible • Ownership is not diluted 2 Shares of Capital Stock »outhortzed »tssued l>oulstanding = ",;\, v-ed - \:r~ntu,'V ~treasury ~.11 3 '\s?J,)e - sh:1r-eS sol""",d~__ DI'JtStfHlRhn:5- 1xlf4\S N)btord~ ±reo5vD{- G'pJrcho. ...... 91~d__
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What is Par Value? ~ minimum amount to be contributed by stockholders • legal requirement Sbt\:.(. * set by board of directors * NO relationship to market price of stock s-common stock is recorded at par »amoum paid for stock in excess of par is credited to Paid-In-Capital J>No par value stock. ., No "?Ie, 11«,214 4 Treasury Stock C-S\-\E. s-Treesury stock results when a company buys its own stock in the market :> The purebase of treasury stock reduces assets and equity /' 51< - Treasury stock (debit, increase)S 500
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This note was uploaded on 09/01/2011 for the course ACCT 284 taught by Professor Clem during the Fall '08 term at Iowa State.

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KIC000084 - CHAPTER 11 Reporting and Interpreting...

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