F1M3-M4 Stakeholders' Equity Flashcards
(15 cards)
C/S Equity
Total S/H Equity - Preferred stock value (greater par value or call value) - Cumulative Dividends
Total S/H Equity
C/S at par + P/S at par + APIC + RE + AOCI - Cost of Treasury Stock
C/S Book Value
C/S Equity / C/S outstanding
JE to issue 10,000 SH par $10 issue price $15
dr cash 15,000
cr c/s 10,000
cr APIC 5,000
Under T/S cost method record purchase of 1,000 SH @ $18
dr T/S 18,000
cr cash 18,000
Under the T/S par method record the purchase of 1,000 SH @ $18 (originally issued @ $10 par + $5 APIC)
dr T/S 10,000
dr APIC-CS 5,000
dr APIC-TS (or RE if APIC TS is 0) 3,000
cr cash 18,000
Reissue 1,000 T/S SH @ $20 (original cost $18)
dr cash 20,000
cr T/S 18,000
cr APIC-Treasury 2,000
Under the T/S par method reissue 1,000 T/S shares @ $20 (par $10)
dr cash 20,000
cr T/S 10,000
cr APIC-C/S10,000
Under the T/S par method when is APIC-T/S debited or credited?
Only during Buy back of treasury stocks. If there is a gain compared to the original issue price APIC-T/S is credited, if there is a loss is debited
Under the T/S cost method when APIC-T/S is debited or credited?
Only when the T/S are reissued or retired. It represents the gain/loss when T/S are reissued/retired: gain APIC-TS is credited; loss it’s debited: if there isn’t enough APIC-TS balance then RE is debited.
Under the T/S cost method what if you reissue 1,000 SH T/S at $14 but APIC-TS has only $2,000 (original T/S cost $18)
dr cash 14,000
dr APIC-TS 2,000
dr RE 2,000
cr T/S 18,000
Under the T/S par method, how do you reissue 1,000 TS stock @ $14 (par $10 APIC $5)
dr cash 14,000
cr T/S 10,000
cr APIC-CS 4,000
what’s the effect on the book value of C/S if the company buys back SH at price lower than the book value of C/S per sh and vice versa if the buy back price is greater than the book value of C/S per SH?
If the buy back price is lower than the book value of c/s per SH the total book value of c/s increase: example book value of c/s $1000 # of c/s sh outstanding 100. buy back 10 sh @ $8 new book value of c/s $920, # of sh 90 new book value of c/s per share 920/90=10.22 increase. if buy back price is greater than the book value of c/s per sh the total book value of c/s decreases.
Under GAAP are companies required to appropriate RE?
No. RE appropriation is voluntary under GAAP. GAAP does not require RE appropriation for any purpose.
When appropriated RE should be restored as unappropriated RE?
When the purpose of the appropriation ends. For example: y1 appropriation of 1.5M for the construction of a plant. in y2 the plant is completed, the 250k should be restored as RE unappropriated.
