UCB+UGBA102A+Topic08+Slides - Stockholders Equity &...

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Stockholders’ Equity & Investments UGBA102A Introduction to Financial Accounting
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UGBA102A Dennis Geyer 2 Stockholders’ Equity Paid-in Capital Additional Paid-in Capital Retained Earnings Treasury Stock
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UGBA102A Dennis Geyer 3 Accounting for Capital Stock O u t s t a n d i n g T r e a s u r y I s s u e d U n i s s u e d A u t h o r i z e d
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UGBA102A Dennis Geyer 4 Valuation of Capital Stock Par Value Par Value is an arbitrary amount specified in the charter and assigned to each share of a given class of stock and printed on the stock certificate. Stated Value Stated Value is an arbitrary amount assigned by the board to each share of a given class of no-par stock. Market Value Market Value is the price per share bought and sold by investors in the market. Book Value Book Value is the stockholders’ equity per share and is derived by taking the difference between total assets and total liabilities and dividing by the number of outstanding shares. Liquidation Value Liquidation Value is the amount a stockholder will receive if a corporation liquidates. Redemption Value Redemption Value is the price per share at which a corporation may call in or redeem its capital stock.
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UGBA102A Dennis Geyer 5 Classes of Capital Stock Common Stock Common Stock represents the residual interest of the corporation. Preferred Stock Preferred Stock represents capital stock that has preferential treatment as to dividends or as to assets in the event of liquidation. Other provisions may exist such as: cumulative vs. noncumulative dividends convertible vs. nonconvertible to common stock callable vs. noncallable by issuer
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UGBA102A Dennis Geyer 6 Additional Paid-in Capital Additional paid-in capital can arise from a number of different types of transactions: 1. Paid in addition to par or stated value 2. Distributed as a stock dividend 3. Resulting from reissue of treasury stock 4. Resulting from donations
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UGBA102A Dennis Geyer 7 Issuance of Stock for Cash Stock Issuance for Cash (Par Value) Assume a company issues 10,000 shares of $20 par value common stock for $22. Cash 220,000 $ Common Stock 200,000 $ Paid-in-Capital in Excess of Par 20,000 $ Stock Issuance for Cash (No Par Value) Assume a company issues 10,000 shares of no par value common stock without a stated value for $22. Cash 220,000 $ Common Stock 220,000 $
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UGBA102A Dennis Geyer 8 Issuance of Stock for Property Stock Issuance for Property Assume a company issues 10,000 shares of $20 par value common stock with a market value of $22 per share in exchange for land appraised at $250,000. Land 220,000 $ Common Stock 200,000 $ Paid-in-Capital in Excess of Par 20,000 $ Donation of Property Assume the company accepts the land appraised at $250,000 as a donation. Land 250,000 $ Paid-in-Capital Donations 250,000 $
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UGBA102A Dennis Geyer 9 Cash Dividends Date of Declaration On January 21, the Board of Directors declared a cash dividend of $0.20 per share on 10,000 outstanding shares.
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This note was uploaded on 10/24/2011 for the course UGBA 102A taught by Professor Udpa during the Summer '07 term at University of California, Berkeley.

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UCB+UGBA102A+Topic08+Slides - Stockholders Equity &...

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