Owner’s equity
- Residual interest in assets that remains after subtracting an entity’s liability
- Include:
- Contributed capital (31)
- Amount contributed by equity common shareholders
- Par value (31-1)
- Stated value
- No relationship to fair value
- Proceeds from issuing equity security = par value + additional paid-in capital (APIC) (31-2)
- Value of share capital above its stated par value and is an accounting item under Shareholders’ Equity on the balance sheet.
- Authorized shares (31-2)
- The number of shares that a corporation is legally allowed to issue,
- Issued shares (31-3)
- Actually sold to shareholders
- the number of outstanding shares is always equal to or less than the number of authorized shares
- Outstanding shares (31-4)
- Issued shares – shares that are reacquired by the firm
- Preferred stock (32)
- Owned by preferred shareholders
- Has rights and privileges not conferred by common stock
- Fixed rate dividends, as a percentage of par value
- Have priority over claims of the common stock in the event of liquidation
- Perpetual preferred stock that is non-redeemable → equity
- Preferred stock that calls for mandatory redemption in fixed amount → financial liability
- Treasury stock (33)
- Stock reacquired by issuing firm but not yet retired
- Retained earnings (34)
- Not paid out to shareholders as dividends
- Non-controlling interest (35)
- Shares of a net assets of a subsidiary that is not wholly owned by the parent
- Accumulated comprehensive income (36)
- All changes in stockholders’ equity except for transactions
- Unrealized gains and losses from available-for-sale securities
- Cash flow hedging derivatives
- Foreign currency translation
- Adjustments for minimum pension liability
- All changes in stockholders’ equity except for transactions
- Contributed capital (31)
- Statement of changes in stockholders’ equity
- All transactions that increase or decrease the equity accounts for the period