CORPORATE FINANCIAL REPORTING

1. Dilutive Securities and EPS Introduction & 15 - Financial Reporting Of Owners’ Equity CORPORATE FINANCIAL REPORTING

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 FEATURES Some features of preferred stock: Rarely gets to vote Stated dividend amount or rate Preference as to dividends Cumulative Participating Convertibleinto common stock Liquidation preference Preferred stock may have any of these (or other) features. · 4

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