935 6356 3808 23743 comprehensive earnings net

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.... $935 $6,356 $59,879 $ (97) $(3,711) $(3,808) $(23,743) Comprehensive earnings: Net earnings .............................. 9,786 9., Other comprehensive earnings (losses), net of income taxes: Currency translation adjustments ........ 736 736 Change in net loss and prior service cost ...... 744 744 Change in fair value of derivatrives accounted for as hedges ......... ... ......... .... (18) (18) - Total other comprehensive earnings ............. 1.-.:: .... -- Total comprehensive earnings ................... 112 ..• Adoption of FIN 48 and FAS 13·2 ................ 711 Exercise of stock options and issuance of other stock awards ... .................... 528 289 Cash dividends declared ($3.05 per share) ......... (6,430) (6.- Spin-off of Kraft Foods Inc .................. (29,520) 89 2,020 2,109 (27. -- -- -- --- - Balances, December 31,2007 ....... ........ $935 $6,884 $34,426 $728 $ (965) $ (237) $(23,454) $lR~ The $29,520 million book value of the Kraft subsidiary (the amount at which this equity in ment is reported on Altria's balance sheet) is removed from Altria's balance sheet when the
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Module 8 I Equity Recognition and Owner Financing 8-26 di tributed to Altria's shareholders, and that amount is subtracted from Altria's retained earn- titled "Earnings Reinvested in the Business"). Altria also removes all amounts relating to - that impacted its Accumulated Other Comprehensive Earnings (a net of $2,109 million). In .the Kraft spin-off reduced Altria's equity by $27,411 million. it-Ofts plit-off is a third form of equity carve-out. In this case, the parent company buys back its stock using the shares of the subsidiary company instead of cash. After completing this - ction, the subsidiary is an independent publicly traded company. The parent treats the split-off like any other purchase of treasury stock. As such, the treasury , account is increased and the equity method investment account is reduced, reflecting the ibution of that asset. The dollar amount recorded for this treasury stock depends on how the ibution is set up. There are two possibilities: Pro rata distribution. Shares are distributed to stockholders on a pro rata basis. Namely, a shareholder owning 10% of the outstanding stock of the parent company receives 10% of the shares of the subsidiary. The treasury stock account is increased by the book value of the investment in the subsidiary. The accounting is similar to the purchase of treasury stock for cash, except that shares of the subsidiary are paid to shareholders instead of cash. Non pro rata distribution. This case is like a tender offer where individual stockholders can accept or reject the distribution. The treasury stock account is recorded at the market value of the shares of the subsidiary distributed. Since the investment account can only be reduced by its book value, a gain or loss on distribution is recorded in the income statement for the difference. (The SEC allows companies to record the difference as an adjustment to additional paid-in capital; the usual practice, as might be expected, is for companies to report any gain as part of income.) - . tol-Myers Squibb's non pro rata split-off of its subsidiary, Mead Johnson, provides an pIe. This transaction is described in the following excerpt from footnotes to Bristol-Myers' K: Mead Johnson Nutrition Company Split-off The split-off of the remaining interest in Mead Johnson was completed on December 23, 2009. The split-off was effected through the exchange offer of previ-
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