SHAREHOLDER’S EQUITY * Owner’s equity section of a corporation’s statement of financial position; 2 major components – share capital and retained earnings. * SHARE CAPITAL – amount of resources received by a corporation as a result of investment by shareholders, donations or other share capital transactions * RETAINED EARNINGS – amount of capital accumulated and retained through the profitable operations of the business. SHARE CAPITAL * Shares to be subscribed and paid in or secured to be paid in by shareholders, either in money, property or services, at the time of organization of the corporation or afterwards, and upon it’s to conduct its operations Divided into – legal capital and share premium * LEGAL CAPITAL – capital …show more content…
| Cash-Settled | Entity received goods or services by incurring liabilities for amounts based on the value of its own equities. | Equity-Settled with Cash Alternative | Entity received goods or services and the entity or the supplier has the choice of whether the transaction is settled in cash or equity instruments. | Measurement a. Share-based payments to non-employees are measured at fair value of the goods or services received. b. Share-based payments to employees including share options, the transaction should be measured at the fair value of the equity instruments granted because the fair value of the service provided by the employees generally is not reliably measurable. Fair value – amount which an asset can be exchanged, liability settled or an equity instrument granted could be exchange between knowledgeable and willing parties in an arm’s length transaction. Fair value is determined using the3-tier measurement hierarchy - observable market prices if available, market data with reference to a recent transaction in the entity’s shares or a recent independent fair valuation of the entity or its principal assets. DEFINITION OF TERMS: * Grant date – date at which the entity and another party agree to a share-based payment arrangement * To vest – to become an entitlement * Vesting period - period
Fair-value measurement and presentation of an entity’s assets and liabilities result in increasing relevancy of financial statements information, so that readers of the financial statements will not have to make complex adjustments in analyzing the entity. Furthermore, the fair-value
* b. Further allocation of amounts allocated to repurchased shares to various components of stockholder equity upon formal or constructive retirement.
e. ASC 718-10-25-2 states that, “an entity shall recognize the services received in a share-based payment transaction with an employee as services are received.” As the
Retained Earnings Statement shows amounts and causes of changes in retained earnings during the period. Time period is the same as that covered by the income statement. Users can evaluate dividend payment practices. This statement shows the changes in the shareholders’ equity account. The first line item is the beginning balance for common stock. The amount of newly issued common stock is added to the
builings, called capital. Corporations pay the capital by selling stocks, or parts of their company, to
b. Issuance or other granting of an equity interest to the creditor by the debtor to satisfy
A. A stock warrant is a certificate that entitles the holder to acquire shares of stock at a certain price within a stated period.
c. the board or compensation committee shall obtain and rely upon appropriate data as to comparability prior to approving the terms of compensation. Appropriate data may include the following:
Assets that are constructed or otherwise produced for an entity’s own use, including assets constructed or produced for the entity by others for which deposits or progress payments have been made.
Securities are confirmation of either debt or ownership. They are also confirmation of related rights. Securities include not only options and warrants, but also debt and stock. (FASB ASC 505-10-50-6) Participation rights are the promised rights of the security holders. This ensures that they will receive dividends or returns from the issuing company’s profits, cash flows, or returns on investments. (FASB ASC 505-10-50-3) Preferred stock are a security that gives preference to the holder over those who hold common stock. (FASB ASC
| AFS securities (equity)-fair value: what you can sell for.-using identifiable market; similar market; judgment.
16) Capital stock to which the charter has assigned a value per share is called
payment. It also includes the product, the price the customer paid as well as manufacturing
Q. When a business borrows money, it incurs a(n) a. tax. b. liability. c. receivable. d. addtional equity. ANS: Q. When a product is sold, this cost is often called a. cost of goods sold. b. revenue. c. products. d. retained earnings. ANS: Q. The financial resources a business owns are called a. assets. b. liabilities. c. earnings. d. stockholders' equity. ANS:
FAS 123(R) 5 states that an entity should recognize services received in a share based payment transaction when those services are received. 10 states that an entity shall account for compensation cost from share-based payment transactions with employees in accordance with the fair-value-based method. Under the fair-value-based method, the cost of services received from employees in exchange for awards of share-based compensation shall be measured based on the grant-date fair value of the equity instruments issued. A10-A17 discuss the acceptable methods of calculating fair value at the grant date. The grant-date fair value of the Murray options is $6. Following the guidance in Illustration 4(a), Share Options with Cliff Vesting, of FAS 123(R), compensation expense for the years ended December 31, 2006 & 2007 is $200,000 per year (calculation attached hereto).