15-Equity - Chapter 15 ShareholdersEquity...

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    Chapter 15 Chapter 15     Shareholders’ Equity
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2 Shareholders’ Equity Shareholders’ Equity The Corporate Form •Corporate law •Share capital system Retained Earnings •Formality of profit distribution •Types of dividends •Stock splits Share capital •Types of shares •Limited liability of shareholders •Issuance of shares •Reacquisition of shares •Retirement of reacquired shares Other Components of Shareholders’ Equity •Contributed surplus •Accumulated other comprehensive income IFRS / Private Entity GAAP Comparison •Looking ahead •Comparison Presentation and Disclosure •Special presentation issues Perspectives •Analysis
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3 Contributed Capital Earned Capital Share Capital: Common and/or Preferred shares Contributed Surplus Components of Shareholders’  Components of Shareholders’  Equity Equity Retained Earnings Accumulated Other Comprehensive Income
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4 Legal capital (stated capital) the full price received for shares issued If par value shares are issued, then legal/stated capital = par value Par value shares are not permitted under CBCA Permitted under some provincial jurisdictions (see Appendix) Defining Capital
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5 Defining Capital Accounting definition of capital Shareholders’ equity which includes: Share capital the legal/stated capital Contributed surplus equity transactions not specifically included elsewhere Retained earnings all undistributed income that remains invested in the business Accumulated other comprehensive income Cumulative change in equity due to revenues and expenses, and gains and losses from transactions not included in net income
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Comprehensive Income  Comprehensive Income  (review from Chapter 4) Net Income + Other  Comprehensiv e Income = Comprehensiv e Income •Includes any item that causes a change in equity except for –investments by owners –distributions to owners correction of errors and adjustments to retained earnings due to retrospective application of changes in accounting policy Retained  Earnings Accumulated  Other  Comprehensive  Income
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7 All Transactions and Events That Cause Changes in Shareholders’ Equity Net Income Transfers Between Entity and Owners Revenues & Expenses Gains and Losses Investments by Owners Distributions to Owners Major Sources of Changes in  Major Sources of Changes in  Shareholders’ Equity Shareholders’ Equity E15-7 page 1001 for review, time permitting
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8 Crown Created by government statute to provide public services Municipalities, Cities, Etc. Primary Forms of Primary Forms of  Business Organization  Business Organization Proprietorship Partnership Corporation Not-for-profit No shares issued; created to provide services for members or society Profit-oriented Engaged in making financial returns for their owners Shares publicly traded Shares privately held Private Sector Public Sector
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Corporate Accounting Corporate Accounting
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15-Equity - Chapter 15 ShareholdersEquity...

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