chapter 14 investasi dalam saham accounting, 21 st edition warren reeve fess powerpoint presentation...

Chapter Chapter 1414Investasi dalam SahamInvestasi dalam Saham

Accounting, 21st Edition

Warren Reeve Fess

PowerPoint Presentation by Douglas CloudProfessor Emeritus of AccountingPepperdine University

© Copyright 2004 South-Western, a division of Thomson Learning. All rights reserved.

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Income from continuing operations Income before extraordinary items and the

cumulative effect of a change in accounting principle

Extraordinary items and the cumulative effect of a change in accounting principle

Net income

Earnings per share (EPS) is the net income per share of common stock outstanding. When unusual items exist, EPS should be reported for:

Laba Per Saham BiasaLaba Per Saham BiasaLaba Per Saham BiasaLaba Per Saham Biasa

Earnings per Common ShareEarnings per Common ShareEarnings per Common ShareEarnings per Common Share

Earnings per common share

=Net Income

Number of common shares outstanding

If there is no preferred stock:

If there is preferred stock:

Earnings per common share

=Net Income – Preferred stock dividends

Number of common shares outstanding

Jones CorporationIncome Statement

For the Year Ended December 31, 2006

Income from continuing operations $690,000

Net income $832,000

Earnings per common share:Earnings per common share:

Income from continuing operations $ 3.45

Loss on discontinued operations (Note B) .50

Income before extraordinary item and cumulative effect of a change in accounting principle $2.95

Extraordinary item .75

Cumulative effect on prior years of changing to a different depreciation method .46Net income $ 4.16




Net income $832,000



Loss on discontinued operations (Note B) . 50







Net income $832,000



Loss on discontinued operations (Note B) .50




Comprehensive IncomeComprehensive IncomeComprehensive IncomeComprehensive Income

Companies may report comprehensive income on the income statement, in a separate statement, or in the statement

of stockholders’ equity.

Companies may report comprehensive income on the income statement, in a separate statement, or in the statement

of stockholders’ equity.

Comprehensive IncomeComprehensive IncomeComprehensive IncomeComprehensive Income

Comprehensive income is defined as all changes in stockholders’

equity during a period.

Comprehensive income is defined as all changes in stockholders’

equity during a period.

However, comprehensive income does not include changes caused by

issuing dividends or from stockholders’ investments.

However, comprehensive income does not include changes caused by

issuing dividends or from stockholders’ investments.

Stockholders’ equity: Common stock $ 20,000$ 20,000Paid-in capital in excess of par36,00036,000

Retained earnings 165,500 157,000Accumulated other

comprehensive income 1,290 1,200Total stockholders’ equity $222,790$214,200

Stockholders’ Equity SectionStockholders’ Equity SectionStockholders’ Equity SectionStockholders’ Equity Section

2006 2005

Accounting for Investments in Accounting for Investments in StocksStocks

Trading securities are securities that management intends to actively trade for profit.

Available-for-sale securities are securities that management expects to sell in the future, but which are not actively traded for profit.

Short-Term Investments in StocksShort-Term Investments in StocksShort-Term Investments in StocksShort-Term Investments in Stocks

Temporary investments are recorded in the current

asset account, Marketable Securities, at their cost.

Temporary investments are recorded in the current

asset account, Marketable Securities, at their cost.


On June 1, Crabtree Company purchased 2,000 shares of Inis Corporation common stock at

$89.75 per share plus a brokerage fee of $500.

On June 1, Crabtree Company purchased 2,000 shares of Inis Corporation common stock at

$89.75 per share plus a brokerage fee of $500.

June 1 Marketable Securities 180 000 00

Purchased 2,000 shares of Inis

Corporation common stock.

Cash 180 000 00

$89.75 x 2,000 shares + $500$89.75 x 2,000 shares + $500


On October 1, Inis declared a $0.90 per share dividend payable on November 30.

On October 1, Inis declared a $0.90 per share dividend payable on November 30.

Nov.30 Cash 1 800 00

Received dividend on Inis

Corporation common stock.

Dividend Revenue 1 800 00

2,000 shares x $0.902,000 shares x $0.90


On the balance sheet, temporary investments are reported at their fair market

value. Any difference between the fair market value and the cost is an unrealized

holding gain or loss.

On the balance sheet, temporary investments are reported at their fair market

value. Any difference between the fair market value and the cost is an unrealized

holding gain or loss.


At year-end, the total cost of Crabtree Co.’s four temporary investments is

$690,000. The current market for these four items totaled $750,000 at year-end.

Thus, Crabtree Co. had a before tax unrealized gain of $60,000.

At year-end, the total cost of Crabtree Co.’s four temporary investments is

$690,000. The current market for these four items totaled $750,000 at year-end.

Thus, Crabtree Co. had a before tax unrealized gain of $60,000.


Crabtree Co.Balance Sheet

December 31, 2006

Crabtree Co.Balance Sheet

December 31, 2006Current assets:

Cash$119,500Temporary investments in

marketable securities at cost $690,000Plus unrealized gain (net of applicable income tax of $18,000) 42,000

732,000

Current assets:Cash$119,500Temporary investments in

marketable securities at cost $690,000Plus unrealized gain (net of applicable income tax of $18,000) 42,000

732,000Stockholders’ Equity

Accumulated other comprehensive income 42,000

Stockholders’ EquityAccumulated other comprehensive income 42,000


Crabtree Co.Statement of Comprehensive Income


Crabtree Co.Statement of Comprehensive Income


Net income$720,000

Other comprehensive income:Unrealized gain on temporary investments

in marketable securities (net ofapplicable tax of $18,000)

42,000Comprehensive income

$762,000

Net income$720,000

Other comprehensive income:Unrealized gain on temporary investments

in marketable securities (net ofapplicable tax of $18,000)

42,000Comprehensive income

$762,000

Long-Term Investments in StocksLong-Term Investments in StocksLong-Term Investments in StocksLong-Term Investments in Stocks

Long-term investments are those investments made by a firm that are not intended as a source of cash in the normal operations of the business.

Long-term investments are those investments made by a firm that are not intended as a source of cash in the normal operations of the business.

EquityMethod

CostMethod

Not significantinfluence

Significantinfluence

Ownership %

Controlling Interest

100%100%

CostMethod

Not significantinfluence

0%0%

20%20%

50%50%With less than 20% ownership the buyer

does not usually have significant influence. The buyer uses the cost method

to account for the investment.

With less than 20% ownership the buyer does not usually have significant

influence. The buyer uses the cost method to account for the investment.


EquityMethod

CostMethod

No significantinfluence


Ownership %


0%0%

EquityMethod 50%50%

Ownership over 20% usually indicates significant influence. The buyer uses

the equity method to account for the investment.

Ownership over 20% usually indicates significant influence. The buyer uses

the equity method to account for the investment.

100%100%

20%20%


Jan. 2 Investment in Brock Corp. Stock 350 000 00

Purchased 40% of Brock Corp.

common stock.

Cash 350 000 00

On January 2, Hally Inc. pays cash of $350,000 for 40% of Brock Corporation’s common stock.

On January 2, Hally Inc. pays cash of $350,000 for 40% of Brock Corporation’s common stock.


Dec. 31 Investment in Brock Corp. Stock 42 000 00

Recorded share (40%) of Brock

Corp. net income of $105,000.

Income of Brock Corp. 42 000 00

For the year ending December 31, Brock Corporation reports net income of $105,000.

For the year ending December 31, Brock Corporation reports net income of $105,000.


Dec. 31 Cash 18 000 00

Recorded share (40%) of

dividends of $45,000 paid by

Brock Corp.

Investment in Brock Crop. Stock 18 000 00

On December 31, Brock Corporation declared a $45,000 dividend, payable on December 31.

On December 31, Brock Corporation declared a $45,000 dividend, payable on December 31.


Mar. 1 Cash 17 500 00

Sold investment in Drey Inc.

stock.

Investment in Drey Inc. Stock 15 700 00

Gain on Sale of Investments1 800 00

On March 1, an investment in Drey Inc. stock that had a carrying amount of

$15,700 is sold for $17,500.

On March 1, an investment in Drey Inc. stock that had a carrying amount of

$15,700 is sold for $17,500.


EquityMethod

CostMethod

No significantinfluence


Ownership %

0%0%

20%20%




100%100%

50%50%

Business CombinationsBusiness CombinationsBusiness CombinationsBusiness Combinations

The corporation owning all or a majority of the voting stock is called the parent company. The controlled

corporation is the subsidiary company. Consolidated financial statements are prepared which combines the

operating results of the two entities.

The corporation owning all or a majority of the voting stock is called the parent company. The controlled

corporation is the subsidiary company. Consolidated financial statements are prepared which combines the

operating results of the two entities.


A merger combines two corporations by one acquiring the properties of another that is then dissolved.

Many businesses combine in order to produce more efficiently or to diversify product lines.

A consolidation is the creation of a new corporation, to which the combined assets and liabilities of the old corporations are transferred to the new corporation.


Mergers: Company A acquires company B. The assets and liabilities of B are transferred to A and B is then dissolved.

Mergers

A

B

Consolidations: Company A acquires company B. The assets and liabilities of both A and B are transferred to a new company C and A and B are then dissolved.

Consolidations

CA

B

FINANCIAL ANALYSIS AND

INTERPRETATION

A firm’s growth potential and future earnings prospects are indicated by how

much the market is willing to pay per dollar of a company’s earnings.

A firm’s growth potential and future earnings prospects are indicated by how

much the market is willing to pay per dollar of a company’s earnings.

Accounting: Earnings Per ShareAccounting: Earnings Per Share

Net Income

Common Shares

Earnings per Share of Common

Stock=

Investing: Price - Earnings RatioInvesting: Price - Earnings Ratio

Market Price Per Share

of Common StockEarnings Per Share of

Common Stock

Price-Earnings

Ratio=

The price-earnings ratio represents how much the market is willing to pay per dollar of a company’s earnings. This indicates the market’s assessment of a firm’s growth potential and future earnings prospects.

The price-earnings ratio indicates that a share of common stock was selling for 10 times earnings for 2005 and 12.5 times for 2006.

An example: 2006 2005

Market price per share $20.50 $13.50

Earnings per share $1.64 $1.35

Price-earnings ratioPrice-earnings ratio 12.5 12.5 10.0 10.0

The EndThe End

Chapter 14Chapter 14

chapter 14 investasi dalam saham accounting, 21 st edition warren reeve fess powerpoint presentation...

Documents

continuing operations

discontinued operations

common share earnings

cumulative effect

share eps

saham biasa slide

different depreciation

prior years