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Flashcards in Stockholders Equity Deck (25):

APIC for each is allocated by its respective % of the total FMV of the shares x the proceeds.

Stockholder's Equity


APIC increases on date subscription is recorded - not on the date paid for or issued

Stockholder's Equity


It will be restricted to the extent of the balance in the Treasury Stock account.

Stockholder's Equity


They are not accrued until declared.

Stockholder's Equity


If a year passes and no Cumulative Preferred Stock is declared- then the dividends in arrears are included as a disclosure - not an accrual in the Financial Statements.

Stockholder's Equity


The gain or loss is the difference between the FMV of the asset distributed at the date of distribution and its carry amount on the company's books

Stockholder's Equity


The effect on Retained Earnings is the Carrying Amount of the asset

RE will be debited when the dividend is declared for the FMV of the asset- which is more (or less) than the carrying amount

Gain/Loss recorded when the asset is distributed will offset the original effect of the debt to RE and will be a wash

The net effect of the entry is that RE will decrease by the CV of the asset

Stockholder's Equity


When Stock Dividend is less than 25% of Common Stock outstanding

Stockholder's Equity


When Stock Dividend is greater than 25% of common stock outstanding

Stockholder's Equity


Stock dividends and stock splits both have no effect on Total Shareholder Equity

Stockholder's Equity


Stock splits only affect par value - APIC remains the same.

Stockholder's Equity


Compensation expense is recorded at the time of grant if options are exercisable immediately

They are based on past service.

Expense recognized : FV Stock Option x # of Shares

Stockholder's Equity


The risk-free interest rate

Stockholder's Equity


The settlement date.

Stockholder's Equity


Compensation costs for share-based payments classified as liabilities are measured by the change in the fair value of the instrument for each reporting period

Stockholder's Equity


Net increase to SHE : Gain on settlement of debt + Credit to SHE from stock issuance

Stockholder's Equity


To eliminate a deficit balance in RE by restating its assets to Fair Value

It does not directly protect a company from its creditors

Stockholder's Equity


(Net Income - P/S Dividends) / Average Common Stockholders Equity

Note: Average CSE : Common Stock + RE

Stockholder's Equity


Total Common Stock
- Total Preferred Stock
- P/S Dividends in Arrears
- P/S Liquidation Premium
:Total Book Value

Book Value per Share : Total Book Value / Shares outstanding

Stockholder's Equity


Dividends per share / earnings per share

Stockholder's Equity


(Net Income - Preferred Dividends) / Average C/S Outstanding

Note - If cumulative- subtract the P/S dividend regardless of whether or not they're declared.

Stockholder's Equity


For EPS purposes- treat C/S stock splits or stock dividends as if they occurred at the beginning of the year- regardless of when actually issued during the year

Stockholder's Equity


EPS is only required to be shown for Income from Continuing Operations and Net Income.

All others (discontinued operations- extraordinary items) can be shown on the Financial Statements or in the notes

Stockholder's Equity


Only if they are dilutive.

Their exercise price is LESS than the market value

If not- you ignore them in the calculation

Stockholder's Equity


[Net Income + Bond Interest (Net of Tax)] / (Average Common Stock Shares + Convertible Equivalents)

Bond interest is added back because if converted- there would be no bond interest expense

Contingent Issue Agreements are included in Diluted EPS if contingency is met

Stockholder's Equity