Counting for payments to preference shareholders

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--.:::counting for payments to preference shareholders follows from the balance sheet classifica- : cash paid out is recorded as interest expense or dividends, when the shares are classified as " ilities or equity, respectively. Under US GAAp, preferred stock is classified as equity and cash . out to preferred shareholders is classified as a dividend. on Stock has one class of common stock, Class A, which has the following important characteristics: Aon's Class A common stock has a par value of $1 per share. Par value is an arbitrary amount set by company organizers at the time of company formation and has no relation to, or impact on, the stock's market value. Generally, par value has no substance from a financial reporting perspective (there are some legal implications, which are usually minor). Its main impact is in specifying the allocation of proceeds from stock issuances between the two con- uibuted capital accounts on the balance sheet: common stock and additional paid-in capital, as we describe below. Aon has 750 million shares of stock that have been authorized for issuance. The company cannot issue (sell) more shares than have been authorized. So, if more shares are needed, say for an acquisition or for one of its various stock purchase programs, it must first get additional authorization by its shareholders. To date, Aon's management has issued (sold) 385.9 million shares of stock. The number of issued shares is a cumulative amount. As of 2009, Aon had issued 362.7 million shares of tack and it issued an additional 23.2 million (385.9 million - 362.7 million) shares in 2010. on has repurchased 53.6 million shares from its shareholders at a cumulative cost of $2,079 million. These shares are currently held in the company's treasury, hence the name treasury stock. These shares neither have voting rights nor do they receive dividends. The number of outstanding shares is equal to the issued shares less treasury shares. There were 332.3 million (385.9 million - 53.6 million) shares outstanding at the end of 2010. alyzing Stock Transactions -~ analyze the accounting for stock transactions in this section, including the accounting for k issuances and repurchases.
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8-7 Module 8 I Equity Recognition and Owner Financing Stock Issuance Companies issue stock to obtain cash and other assets for use in their business. Stock issuan increase assets (cash) by the issue proceeds: the number of shares sold multiplied by the pri of the stock on the issue date. Equity increases by the same amount, which is reflected in c tributed capital accounts. If the stock has a par value, the common stock account increases _ the number of shares sold multiplied by its par value. The additional paid-in capital acco increases for the remainder. Stock can also be issued as "no-par" or as "no-par with a sta value." For no-par stock, the common stock account is increased by the entire proceeds of sale and no amount is assigned to additional paid-in capital. For no-par stock with a starer, value, the stated value is treated just like par value, that is, common stock is increased by
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