Includes only the equity of the parent companys

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includes only the equity of the parent company's shareholders (excluding noncontrolling intere: equity). For the Aon financial statements shown above, that calculation follows (we use the year- end balance of equity, and not average equity, since we only illustrate one year in this example): $706 ROE =--= 86% $8,251 . Noncontrolling interest is reported as a component of stockholders' equity and represents the claim of the noncontrolling interest to their proportionate share of the net assets and net income the subsidiary in which they own stock. These shareholders do not have a claim on the net assets or income of any other subsidiary or of the parent company. Further, their claim is a resid claim, like that of any other shareholder; that is, they are not entitled to a preference in dividends or payouts in liquidation. Summary of Stockholders' Equity The statement of shareholders' equity summarizes the transactions that affect stockholders' equin during the period. This statement reconciles the beginning and ending balances of importars; stockholders' equity accounts. Aon's statement of stockholders' equity is in Exhibit 8.4. Aon's statement of shareholders' equity reveals the following key activities for 2010: - EXHIBIT 8.4 Aon's Statement of Stockholders' Equity (millions) Common Stock and- Accumulated Additional Other Non- Paid-in Retained Treasury Comprehensive controlling Compreh~ Shares Capital Earnings Stock Loss, Net of Tax Interest Total Income Balance at December 31, 2009 . Adoption of new accounting guidance . 362.7 $3,578 $7,335 $(3,859) $(1,675) 44 - (44) -- 362.7 3,578 7,379 (3,859) (1,719) 706 61.0 2,474 2.2 135 (250) (370) (49) 370 (40.0) (1,660) - 1,660 20 221 (175) (24) (133) (41) (12) $52 $5,431 . $583 (44) 539 732 Balance at January 1, 2010 . Net income . ~ Shares Issued-Hewitt acquisition. . Shares Issued-employee benefit plans 1 Shares purchased ... . . . .. .... . ~~:;:: ;:;~r:~ed.~~PIO~~~.~~~~f:t.~I~~~ .. : . ~ Tax benefit-employee benefit plans . ~Stock compensation expense . m-= Dividends to stockholders . 0-Change In net derivative gains/losses . r,:-r- Net foreign currency translation L...§J adjustments . . . .. . . . . . .. . .. [f]-;: Net postretirement benefit obligation , purChase of subsidiary shares from noncontrolling Interest ... . . . .. 7 Capital contribution by noncontrolling DI~~~:~:: ~~;~;~ ~~~~~~;;o·II;~~ ;~t~;~~t·~~ .. subsidiary common stock. . . . . . . .. . .. 52 5,431 26 732 2,474 135 (250) (49) 20 221 (175) (24) (24) (2) (135) (41) (135) (41) (3) (15) 2 2 Balance at December 31,2010. . .... ..... . 385.9 $4,386 $7,861 $(2,079) $(1,917) (20) (20) $55 $8,306 $532
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Module 8 I Equity Recognition and Owner Financing 8-24 common stock and additional paid-in capital. Aon does not provide information relating to accounting for share reissuance for the employee benefit plans. _ Taxbenefits (in excess of the deferred tax asset previously recorded) arising from the exercise of employee stock options are recorded as an increase in additional paid-in capital (not as a reduction of tax expense). --..,. Dividends are recorded as a reduction of retained earnings. Change in the fair value of derivatives relates to cash flow derivatives. These unrealized gains (losses) are reflected as increases (decreases) in AOCI until the underlying transaction occurs, at which time they are removed from AOCI and transferred into the income statement. We discuss the accounting for derivatives in the appendix to Module 9.
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