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1、,Chapter 10 Shareholders Equity,,Stock transaction,Four important stock transactions四种典型的股票交易: Sell the stocks 出售股票 Repurchase the stocks 回购股票 Retire the stocks 注销股票 Resell the stocks 回购股票的再次出售,,Sell the stocks 出售股票,When the company sells stocks, both cash and shareholders equity are increased, then
2、 the company becomes larger 当公司出售股票（发行新股）时，现金和股东权益均增加，公司规模即扩大. Exp. Alta Vena Company issues 2,000 shares of common stocks having a par value of $1, for a total price of $8,000. Dr. Cash 8,000 Cr. Common stock 2,000 Additional contributed capital-common 6,000,,Repurchase the stocks 回购股票,When the com
3、pany buys back stocks, both cash and shareholders equity are decreased, then the company becomes smaller 当公司回购股票时，现金和股东权益均减少，公司规模即缩小. Exp. Alta Vena Company buys back 2,000 shares of its own common stocks for $9,000. (which it had originally sold for $8,000) Dr. Treasury stock 9,000 Cr. Cash 9,000 S
4、hares repurchased and not retired are referred to as treasury stock 被回购而未被注销的股票被称为“库存股”.,,Repurchase the stocks,One contra equity account 股东权益的备抵账户:,Treasury stock,+,-,,Retire the stocks 注销股票,If repurchase pricepar value 当回购价面值时 , debit the “common stock” and “additional contributed capital”, credit
5、 the “treasury stock”, then record the remaining amount as “retained earnings”. If repurchase pricepar value 当回购价面值时 , debit the “common stock”, credit the “treasury stock”, then record the remaining amount as “additional contributed capital”.,,Example,Exp. Alta Vena Company buys back 2,000 shares o
6、f its own $1 par value common stocks (which it had originally sold for $8,000) for $9,000 and retires the shares. Par value=$2,000, Repurchase price=$9,000 Repurchase price Par value Dr. Treasury stock 9,000 Cr. Cash 9,000 Dr. Common stock 2,000 Additional contributed capital-common 6,000 Retained e
7、arnings 1,000 Cr. Treasury stock 9,000,,Example,Exp. Alta Vena Company buys back 2,000 shares of its own $1 par value common stocks (which it had originally sold for $8,000) for $1,500 and retires the shares. Par value=$2,000, Repurchase price=$1,500 Repurchase price Par value Dr. Treasury stock 1,5
8、00 Cr. Cash 1,500 Dr. Common stock 2,000 Cr. Treasury stock 1,500 Additional contributed capital-common 500,,Resell the stocks 回购股票的再次出售,Exp. Alta Vena Company buys back 2,000 shares of its own common stocks for $10,000 and then resells these shares to investors for $15,000. Dr. Treasury stock 10,00
9、0 Cr. Cash 10,000 Dr. Cash 15,000 Cr. Treasury shares 10,000 Additional contributed capital-common 5,000,,Exercise,Prior to the transactions, Borners shareholders equity included the following: On Jan. 7, 2011, Borner repurchased 2 million shares at $5 per share and then retired the shares. On Aug.
10、2, 2011, Borner repurchased 4 million shares at $0.5 per share and then retired the shares. On Sep. 1, 2011, Borner repurchased 3 million shares at $6 per share and then resold the shares at $7 per share.,,Reserves & Retained earnings,Reserves: it includes statutory reserves and voluntary reserves.
11、Statutory reserves: also called legal reserves, are created based on the requirements of the law 法定盈余公积：法律规定必须统一提取的盈余公积 . Exp. In China, it requires that companies set aside 10% of their net income for the year as a “statutory reserve”. Voluntary reserves: the company sets aside a certain percentage
12、 of its net income according to its own wish 任意盈余公积：公司自行提取的盈余公积 .,,Reserves & Retained earnings,Retained earnings: a companys accumulated profits (or losses) less any distributions that have been made therefrom 未分配利润：公司进行了所有分配之后的累积的净利润（或净损失） . Retained earnings=Profits (or Losses) any distributions
13、Distributions: Statutory reserves, Voluntary reserves, or dividends.,,Example,Max Company had 2,000,000 of net income in 2011. According to the law, it requires that companies set aside 10% of their net income for the year as a “statutory reserve”. Max then set aside 5% of its net income as “volunta
14、ry reserve”. In that year, Max distributed 500,000 of cash dividends. What is the amount of “retained earnings”? Retained earnings =2,000,000-2,000,00010%-2,000,0005%-500,000=1,200,000,,Accounting for retained earnings,Two parts will be discussed in the following section: Cash dividends 现金股利 Stock d
15、ividends 股票股利,,Cash dividends,Cash dividends: Companies plan to pay dividends to stockholders in cash. Usually, we have three important dividend dates, which are 分配现金股利的三个重要日期: The declaration date 股利宣告日 We reduce retained earnings and record a liability (dividends payable) The record date 股权登记日 We
16、make no journal entry. The payment date 股利支付日 We reduce the liability account and cash account.,,Example,On May 1, 2011, the directors of River Corp. declare a $0.75 per share dividend on River Corp.s 650,000 outstanding common stocks. The dividend is payable May 25 to holders of record May 15. May
17、1 (the declaration date): Dr. Retained earnings 487,500 Cr. Dividends payable 487,500 May 15 (the record date): No entry. May 25 (the payment date): Dr. Dividends payable 487,500 Cr. Cash 487,500,,Stock dividends,Stock dividends: the distribution of additional shares of stock to current shareholders
18、 of the corporation 股票股利:公司以增发新股的方式支付股利. A stock dividend affects neither the assets nor the liabilities of the firm. 发放股票股利不会导致企业资产的减少或负债的增加 Its not an actual distribution of the assets. Its not a promise to distribute those assets. Because each shareholder receives the same percentage increase in
19、shares, shareholders percentage ownership of the firm remains unchanged.发放股票股利不会引起股东所持股票比例的变化,,Example,Craft declares and distributes a 10% common stock dividend (10 million shares) when the market value of the $1 par common stock is $12 per share. Dr. Retained earnings 120 Cr. Common stock 10 Addit
20、ional contributed capital-common 110,,Exercise,Prepare the appropriate entries for the following events: On March 1, the board of directors declared a cash dividend of $1 per share on its 120 million outstanding shares, payable on April 3 to shareholders of record March 11. A 10% common stock divide
21、nd (18 million shares) was declares and distributes when the market value of the $2 par common stock is $15 per share. On Dec. 1, the board of directors declared the 9.09% cash dividend on the $11 million preferred shares, payable on Dec. 23 to shareholders of record Dec. 11.,Brief introduction of c
22、hapter 10,1) definition of shareholders equity 2) difference between the liability and equity. 3) two basic resources of shareholders equity 1) invested capital 2) earned capital 4) describe the components of shareholders equity 5) comprehensive income 6) accounting for transaction with equity,,,Nat
23、ure of shareholders equity,Shareholders equity is the residual interest in the assets of an entity after deducting all liabilities 所有者权益是企业资产扣除负债后所有者享有的剩余权益. Residual interest Shareholders equity=Assets Liabilities,,Components of shareholders equity,Shareholders equity,Issued share capital 已发行股本,Sta
24、ted capital (Par capital) 股本/实收资本,Additional contributed capital (share premium) 资本公积(股本溢价),Retained earnings 未分配利润,Reserves 盈余公积,,Issued share capital,Stated capital (par capital): this is referred to as face value per share. (paid-in capital)股本：每股的面值 Common stock 普通股 Also called ordinary share, it
25、 represent the residual ownership of the corporation. Common stockholders control the management of the corporation. 控制公司的管理层（有决策权） Preferred stock 优先股 Also called preference share Preferred stockholders will get a fixed dividend 获取固定股利 before it distributes any amount to the common stockholders.,,I
26、ssued share capital,Additional contributed capital 资本公积 Also called paid-in capital in excess of par value, or capital surplus This is the amount received on the issuance of shares that is the excess over the par value. 金额为发行价超出面值的部分,,Example,LCD corporation issued 100,000 common shares with a par v
27、alue of $1 per share. The stock price is $3.5 per share. What is the amount of “stated capital”? What is the amount of “additional contributed capital”? Stated capital=$1100,000=$100,000 Or common stock=$100,000 Additional contributed capital =($3.5-$1)100,000=$250,000,,Accounting for issuance of sh
28、ares,Four parts will be discussed in the following section: Shares issued for cash 发行股票获取现金 Shares issued for non-cash assets 发行股票获取非现金资产 More than one security issued for a single price 以一个价格发行一种以上证券 Share issue costs 股票发行费用,,Issued for cash,Example: Dow industrial sells 100,000 of its common share
29、s, $1 par per share, for $10 per share. Stated capital (common stocks) =100,000$1=$100,000 Additional contributed capital =($10-$1)100,000=$900,000 Dr. Cash 1,000,000 Cr. Common stock 100,000 Additional contributed capital-common 900,000,,Exercise,P459 E10-4,,Issued for non-cash assets,If the shares
30、 are issued in exchange for non-cash assets, the transaction should be reflected at the fair value of the assets received 如果通过发行股票换取了非现金资产，那么换取的资产以公允价值计价. If the fair value of the asset received is unknown, then the transaction should be recorded at the fair value of the shares issued. 如果换取的资产的公允价值未
31、知，则该资产以发行股票的公允价值计价。,,Example,DuMont Chemicals issues 1 million of its common shares, $1 par per share, in exchange for an equipment with a market price of $6 million. Fair value of the asset=$6 million Stated capital (common stocks) =$11 million shares=$1 million Additional contributed capital =$6-$
32、1=$5 million Dr. Equipment 6 Cr. Common stock 1 Additional contributed capital-common 5,,Example,DuMont Chemicals issues 1 million of its common shares, $1 par per share, in exchange for an equipment for which no market price is available. Todays stock price is $10 per share. Fair value of the asset
33、 is unknown. Fair value the stocks=$101=$10 million Stated capital (common stocks) =$11 million shares=$1 million Additional contributed capital =$10-$1=$9 million Dr. Equipment 10 Cr. Common stock 1 Additional contributed capital-common 9,,More than one security issued for a single price,Sometimes,
34、 a company might sell common shares and preferred shares for a single price 有时，公司以一揽子价格同时发行普通股和优先股. Total selling price=common shares value + preferred shares value If only one securitys value is known, then: The second securitys market value=total selling price the first securitys value 如果其中一种股票的价值
35、已知，则另一种股票的价值=发行总价 前一种股票的价值,,Example,P434 Illustration 10-4 Par value of common stocks=$14=$4 million Par value of preferred stocks=$104=$40 million Total selling price=$100 million Common stocks value=$104=$40 million Preferred stocks value is unknown. Preferred stocks value=$100-$40=$60 million Dr.
36、 Cash 100 Cr. Common stock 4 Additional contributed capitalcommon 36 Preferred stock 40 Additional contributed capitalpreferred 20,,Exercise,P459 E10-5,,Share issue costs,Share issue costs reduce the net cash received from selling the shares and also reduce “additional contributed capital” 股票发行费用的产生
37、将减少发行股票获取的净现金收入和资本公积的金额. Net cash=total selling price share issue costs 净现金收入=发行总价 股票发行费用 Additional contributed capital=Net cash stated capital 资本公积=净现金收入 股本,,Share issue costs,Example: Dow industrial sells 100,000 of its common shares, $1 par per share, for $10 per share. The company should pay 3% of total selling price as share issue costs. Net cash=$10100,000(1-3%)=970,000 Additional contributed capital =$970,000-$100,000=$870,000 Dr. Cash 970,000 Cr. Common stock 100,000 Additional contributed capital-common 870,000,,Exercise,P459 E10-7,,Thank You !,