· 1

CORPORATE FINANCIAL REPORTING

Introduction & 15 - Financial Reporting Of Owners’ Equity

Dilutive Securities and EPS

· 2

STOCKHOLDERS’ EQUITYCOMMON STOCK

Usually considered the “real” owners of the corporation.

Common stock may have par value, stated value or no-par, no-stated value, depending on the rules of the state of incorporation.

Par/stated value are really meaningless.

· 3

STOCKHOLDERS’ EQUITYSUBSCRIPTIONS FOR COMMON STOCK

You have a start-up corporation that wants to raise capital.

I promise to buy 1,000 shares of your corporation’s $1 par common stock for $12/share by paying 1/4th of the price today and 1/4th each month for the next 3 months.

· 4

STOCKHOLDERS’ EQUITYPREFERRED STOCK COMMON FEATURESSome features of preferred stock:

Rarely gets to vote Stated dividend amount or rate Preference as to dividends Cumulative Participating Convertible into common stock Liquidation preferencePreferred stock may have any of these (or other)

features.

· 5

STOCKHOLDERS’ EQUITYDIVIDENDS

Several types of dividends: Cash dividends Property dividends Stock dividends

· 6

STOCKHOLDERS’ EQUITYDIVIDENDS - Dates

Declaration: Dividend declared $ xxx Dividend payable $ xxx

Payment: Dividend payable $ xxx Cash $ xxx

Closing: Retained earnings $ xxx Dividend declared $ xxx

· 7

STOCKHOLDERS’ EQUITYDIVIDENDS – Property Dividends

Property dividends are non-cash asset dividends.

FASB believes property dividends should be valued at fair value.

· 8

STOCKHOLDERS’ EQUITYStock Dividends and Stock Splits

◊ Stock dividends - small - large

◊ Stock splits (sometimes called “stock split-up”)

- normal - split effected in the form of a stock dividend

· 9

STOCKHOLDERS’ EQUITYTreasury Stock

Cost method

Par value method

Donated to the company