ch15

large stock dividends

...involve the distribution of additional shares that are more than 20-25% of the outstanding shares. The amount transferred from retained earnings is equal to the par value of the shares times the number of shares.

3 types of dividends

1. cash dividends 2. property dividends 3. liquidating dividends

corporation

A business owned by stockholders who share in its profits but are not personally responsible for its debts

stock split

A division of shares of a company into a larger number of shares. (A 2 for 1 split allows a shareholder to double the number of shares but worth one half of their previous value).---- company records no entry for a stock split. it enters a memo note to indicate the changed par value of the shares and the increased # of shares

liquidating dividend

Any dividend not based on retained earnings and reduces corporate Paid in Capital

underwriting cost

Direct costs incurred to sell stock, such as

callable preferred stock

Gives the issuing corporation the right to purchase (retire) this stock from its holders at specified future prices and dates.

book value method

IFRS - what method is used when preferred shares are converted into ordinary shares--------debit P/S, along w/ any related PIC in excess of Par-P/S, and credit C/S and PIC in excess of par-C/S

pro rata

In proportion; according to a certain percentage or proportion of a whole.

participating preferred stock

Preferred stock whose holders share ratably with the common stockholders in any profit distributions beyond the prescribed rate. Its holders receive the prescribed return for preferred stock plus dividends generally at the same rates as those paid to common stockholders if the company pays dividends on common stock in excess of the prescribed preferred rate

convertible preferred stock

Preferred stock with an option to exchange it for common stock at a specified rate.

treasury stock

Stock reacquired by the issuing company and available for RETIREMENT or resale. It is issued but not outstanding. It cannot be voted and it pays or accrues no dividends.---- Contra Stockholder's Equity

date of declaration

The date the directors vote to declare and pay a dividend.

stock repurchase

This is the practice where a company uses its profits to purchase existing shares of its stock either on the open market or directly from shareholders. This usually tends to increase the price of the stock.

secret reserves

This occurs when a corporation undervalues the recorded assets as a result of the issuance of stock for property or services in noncash transactions involving stock. An understated corporate structure (secret reserve) may also result from other methods: excessive depreciation or amortization charges, expensing capital expenditures, excessive write-downs of inventory or receivables, or any other understatement of assets or overstatement of liabilities.

dividend in arrears

Unpaid dividend on cumulative preferred stock; must be paid before any regular dividends on preferred stock and before any dividends on common stock.

cash dividend

a pro rata (proportional to ownership) distribution of cash to stockholders

equity securities

also called stocks, but represent equity or ownership in the issuer.

indirect costs (mgmt salaries, recurring costs, primarily registrar and transfer agents' fees)

are expensed as incurred

In corporate law, the ______ has the power to set the value of noncash transactions

board of directors

residual interest

common stockholders' equity

a declared cash dividend is a

current liability

direct cost (underwriting costs, acct and leagal fees, printing costs, and taxes) related to issuing stock should be

debited issue costs to Paid-in Capital in Excess of Par- Common Stock becasue they are unrelated to corporate operations. In effect, issue costs are a cost of financing. As such, issue costs should reduce the proceeds received from the sale of the stock.

property dividend/ dividends in kind

dividends payable in assets of the corporation other than cash

redeemable preferred stock

has a mandatory redemption period or a redemption feature that the issuer cannot control

low par value

helps companies avoid the contingent liability associated with stock sold below par

cumulative preferred stock

preferred stock on which undeclared dividends accumulate until paid; common stockholders cannot receive dividends until cumulative dividends are paid

internal financing

profits generated by the company that are retained and reinvested in the company

debt securities

represent investor loans to the corporations. They have a stated maturity date and provide for periodic interest payments. These payments are required despite corporate solvency.

when declaring a property dividend, the corporation should

restate at fair value the property it will distribute, recognizing any gain or loss as the difference between the property's fair value and carrying value at date of declaration

All dividends, except for ______, reduce the total stockholders' equity in the corporation. When declaring a _______, the corp does not pay out assets or incur a liability. It issues additional shares of stock to each stockholder and nothing more.

stock dividend

small stock dividends

stock dividends of less than 20-25% of issued stock, value assigned to the dividend is fair market value; declaration: debit stock dividends, credit common stock dividends distributable, paid-in capital in excess of par value

earned capital

the capital that develops from profitable operations

preemptive right

the right granting to shareholders the first opportunity to buy a new issue of stock of the same class------protects an existing stockholder from involuntary dilution of wonership interest

Companies do not declare or pay cash dividends on

treasury stock

preferred stock

优先股A special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.

outstanding stock

发行在外的股票

partnership

合伙经营(的企业) A business owned and controlled by two or more people who have entered into a written agreement

contributed paid in capital

实收资本all amounts paid in by share holders (includes items such as the par value of all outstanding stock and premiums less discounts on issuance.)

treasure stock

库存股A corporation's own stock that has been reacquired by the corporation and (not retired) is being held for future use----- is not an asset-----treasury stock is a contra stockholders' equity account

watered stock

掺水股, inflating the value of a corporation's assets and profits before sellin its stock to the public

no-par stock

无面额股票 capital stock without a par value; reasons being 1) issuance of no-par stock avoids the contingent liability that might occur if the corp issued par value stock at a discount 2) some confusion exists over the relationship between the par value and fair value so if shares have no par value, the questionable treatment of using par value as a basis for fair value never arises

common stock

普通股Represents ownership in a publicly held company which entitles owners to dividends (if declared by the company's Board of Directors), voting rights on matters affecting the company, and in the elections of Boards members.

proprietorship

独资企业A business owned and run by just one person.

par value

票面价值 Amount borrower promises to pay on or before maturity date.

Additional paid-in capital/paid-in capital in excess of par

资本公积 Any excess over par value paid in by stockholders in return for the shares issued to them. Once paid in, the excess over par becomes a part of the corporation's additional paid-in capital. Also called paid-in capital in excess of par.

capital gain

资本所得Profit from the sale of an asset.(Capital gain can result when stock is sold for a higher price than was paid for it). --- capital gain tax rates is lower