Inversely, when a share repurchase is seen as treasury stock, the cost of the treasury stock is naturally disclosed as a decrease in total shareholders’ equity. Alcoa would report the purchase of the treasury stock by debiting treasury stock and crediting cash for the charge of the purchase. The treasury stock ought to be disclosed independently in the shareholders' equity area of Alcoa’s balance sheet as an unallocated cut of shareholders' equity. These shares are treated as issued although not part of common stock outstanding. If subsequently resold for a sum larger than the cost, Alcoa should report for the sale of the treasury stock by debiting cash for the sale cost, crediting treasury stock for cost, and crediting additional paid-in capital from repurchased stock for the excess of the selling price over the cost.
2. a. Critique Ace Repair’s current method of estimating its before-tax cost of debt. b. Is the earnings yield (E/P) an appropriate measure of the firm’s cost of equity? 3. a.
D. balance sheet as an item of stockholders’ equity. 44) Which of the following statements is false? A. Cash dividends should be recorded as a liability when they are declared by the board of directors. B.
Merger or acquisition of Smithon by Johnson Services a) If the two companies are merged then Smithon could use Johnson Company’s NOL carry forward. The amount of the taxable income of any new loss corporation for any post-change year which may be offset by pre-change losses shall not exceed the section 382 limitation for such year. As in IRC sec 382 limitations are except as otherwise provided in this section, the section 382 limitation for any post-change year is an amount equal to— (A) the value of the old loss corporation, multiplied by (B) the long-term tax-exempt
If a company pays out dividends, it may reduce their capability to pay their liabilities. The first entry is the retained earnings from the previous financial period. The next entry is the net income from the income statement. If dividends were paid to shareholders, the amount would be deducted from the sum of previous retained earnings and the net income. The result would be the retained earnings from the current financial period.
It includes options and warrants as well as debt and stock. "(2) Participation rights – contractual rights of security holders to receive dividends or returns from the security issuer’s profits, cash flows, or returns on investments. " "(3) Preferred Stock – a security that has preferential rights compare to capital stock. " (C) What information about securities must companies disclose? Discuss how Hincapie should report the proposed preferred stock issue.
2. Participation Rights Contractual rights of security holders to receive dividends or returns from the security issuer’s profits, cash flows, or returns on investments. 3. Preferred Stock A security that has preferential rights compared to common stock. C. What information about securities must companies disclose?
The second ratio measures the effect of interest; it indicates the proportion of earnings before interest and tax that is retained after paying interest. It should be considered together with the leverage component (assets/equity). The third ratio measures the company’s operating profit on sales; it can be broken down into subcomponents such as gross profit margin. Common-sized income statements can help with
The retained earnings statement reconciles the beginning and ending balances of the retained earnings. Some organizations sometimes combine it with the income statement. The final amount of the retained earnings is the ending balance, which indicates why the earnings may have increased or decreased for that period. If there is a net loss, the loss is deducted from the dividends in the retained earnings (Weygandt, 2008). As for the balance sheet, it shows the assets, liabilities, and stockholder’s equity for a specified date.
Which of the following choices regarding the proprietary fund financial statements is true? A. The Statement of Net Assets (Balance Sheet) reflects equity as contributed equity and retained earnings. B. Normally, a reconciliation is required between the proprietary fund financial statements and the business-type activities column in the government-wide financial statements.