会计英语第5版教学课件lesson6

LessonSix:Owner’sEquityAims:1.Todescribethecharacteristicsoflimitedcompany.2.Todifferentiateamongauthorized,issued,andoutstandingshares.3.Tounderstandpreferredstock,andcommonstock.4.Tomeasuretheeffectofissuingstockonacompany’sfinancialposition.5.Toaccountfordividendsandmeasuretheirimpactonacompany.6.Tounderstanddifferentvaluesofastock.7.Toreportstockholders’equitytransactionsontheCashFlowStatements.6.1

Introduction:LimitedCompanyALimitedCompanyisanorganizationcreatedbylawwhichhasatleasttwoownerscalledshareholders.Directorsmanageacompanyandareresponsibleandaccountabletotheshareholders.AlimitedcompanyisalsoregulatedbytheCompaniesActsandhasalegalpersonalityseparateanddistinctfromtheshareholders.6.2

TwoTypesofLimitedCompanyThemaindifferencebetweenthetwotypesofcompanyliesintherestrictionsplacedontheissueortransferoftheirshares.Apubliclimitedcompanyoffersitssharesforpublicsubscription;Aprivatelimitedcompanyrestrictsitsshareownership.6.3

ShareCapitalThecapitalofalimitedcompanyisdividedintosharesthathaveanominal/parvalue.Thetwomainclassesofsharesareordinaryshares,(orequity),andpreferenceshares.6.4

CommonStock(1)Voteatstockholders’meetings.(2)Shareinearningsdistributions.(3)Purchaseadditionalsharesinproportiontotheowner’spresentholding,ifmoresharesareissuedbythecorporation.(4)Shareintheassetsifthecorporationliquidates.6.5

MeasuretheEffectofIssuingStock

onaCompany’sFinancialPositionCorporationsissuestocktoraisecapitaltofinanceoperations.1.Acorporationissues(sells)allorpartofthestockthatisauthorizedinthecorporatecharter.2.Stockmaybesoldeithertoanunderwriterordirectlytoshareholders.Thepricethatthestockholderpaysiscalledtheissueprice.6.6

PreferredStock

Preferredstockisstockthatgivesitsownercertainpreferencesorrightssuperiortothoseofcommonstock.Usuallythesepreferencespertaintodividendsortodistributionofassetsatliquidation.Preferredstockownerstypicallyhavenovotingrights.Activities:Thedifferencesbetweencommonstockandpreferredstock

YoucanlearnitfromthevideobyscanningtheQRcode.Assignment:完成课后任务四。6.7

AnExampleofDividendDistributionToillustrate,assumethatKFCCompanyhas4000sharesof$50par,$4preferredstock,and4000sharesof$10parcommonstockoutstanding.Theamountavailablefordividendsfortheyearis$28000.This$28000wouldbeallocatedbetweenthepreferredandcommonsharesasfollows:1.Totalamountavailablefordividends

$280002.Dividendtopreferredstock:4000shares×$4

$160003.Amountavailableforcommonstock$12000Dividendspershare:Preferredstock

$4Commonstock($12000÷4000shares)

$36.8

CumulativeandNon-cumulativePreferredStockPreferredstockonwhichdividendclaimsdonotaccumulatefromyeartoyeariscallednon-cumulativepreferredstock.Preferredstockonwhichanyunpaiddividendsaccumulatefromyeartoyeariscalledcumulativepreferredstock.AssumethattheKFCCompanydescribedinthepreviousillustrationdeclarednodividendsinYear1ofoperationand$44000inYear2.NeitherthepreferredstocknorthecommonstockownerswouldreceiveanydividendsinYear1.ThedividendsinYear2forthecumulativeandnon-cumulativepreferredstocksituationswouldbeasfollows(Table6-1):

CumulativeNon-cumulativeDividendstopreferredstock$32000$16000Amountavailableforcommonstock$12000$280006.9

CapitalStructureThecapitalstructureofalimitedcompanyistherelationshipbetweenitsvarioussourcesoflongtermcapital.Gearingistherelationshipbetweendebtandequity.Theimportanceofthegearingratioisthatitprovidesinformationaboutanorganization’sfinancialrisk.6.10

CashDividendsCashdividendsaredistributionsmadebyacompanytoitsshareholders.Journalentriesareillustratedasfollows:(1)Ondeclarationdate.RetainedEarnings

××

DividendsPayable

××(2)Onpaymentdate.DividendsPayable

××

Cash ××6.11

StockDividendandStockSplitAstockdividendisaproportionaldistributionbyacorporationofitsownstocktoitsownstockholders.Stockdividendsdonottransferassetstostockholdersandthereforeonlyaffectstockholders’equityandstockholders’equityaccounts.Astocksplitisanincreaseinthenumberofsharescoupledwithaproportionatereductionintheparvalueofthestock.Stocksplitsarerecordedwithamemorandumentrybecausenoaccountbalancesareaffected.Stocksplitsreducethemarketpriceofthestock.Assignment：请完成课后任务五。6.12

TheDifferentValuesofaStockThemarketvalueofastockisitscurrentsellingprice.Thebookvalueofastockmeasurestheamountofnetassetsorstockholders’equitypershare.Theredemptionvalueofastockisthepricethecorporationpaystobuybackitspreferredstock.6.13

ReportingStockholder