Akuntansi untuk Modal dan Laba yang D itahan

1. Akuntansiuntuk Modal danLaba yang Ditahan

2. Learning Objectives 1.Identify the rights associated with ownership of common and preferred stock. 2. Record the issuance of stock for cash, on a subscription basis, and in exchange for noncash assets or for services. 3. Use both the cost and par value methods to account for stock repurchases. 4. Account for the issuance of stock rights and stock warrants. Continued

3. Learning Objectives 5.Explain the difference between the intrinsic value and fair value methods, and use both in accounting for a fixed stock option plan. 6. Distinguish between stock conversions that require a reduction in retained earnings and those that do not. 7. List the factors that impact the retained earnings balance. Continued

4. Learning Objectives 8. Properly record cash dividends, property dividends, small and large stock dividends, and stock splits. 9. Explain the background of unrealized gains and losses recorded as direct equity adjustments, and list the major types of equity reserves founds in foreign balance sheets. 10. Prepare a statement of changes in stockholders’ equity.

5. Equity Items XYZ Corporation XYZ Corporation Common Stock Common Stock ISSUE preferred or common stock PAY cash dividends INCREASE shares outstanding through stock dividends and stock splits GRANT options to officers and employees

6. Equity Items XYZ Corporation XYZ Corporation XYZ Corporation XYZ Corporation XYZ Corporation Common Stock Common Stock Common Stock Common Stock Common Stock XYZ Corporation XYZ Corporation Common Stock REPURCHASE shares of stock CONVERT other securities into shares of common stock REPORT performance to current and potential investors

7. Common Stock The owners of common stock of a corporation can be thought of as the true owners of the business.

8. Common Stock Unless restricted by terms of the articles of incorporation, the common stockholder has certain basic rights.

9. Common Stock • The right to vote in the election of directors and in the determination of certain corporate polices such as the management compensation plan or major corporate acquisitions. • The right to maintain one’s proportional interest in the corporation through purchase of additional common stock if and when it is issued.

10. Common Stock Rex Corporation issued 5,000 shares of common stock with a par value of $1 on April 1, 2005, for $30,000 cash. Apr. 1 Cash 30,000 Common Stock 5,000 Additional Paid-In Capital 25,000 at Par Value

11. Preferred Stock The title “preferred” stock is somewhat misleading. Preferred isn’t better; it’s different.

12. Preferred Stock The rights of ownership given up by preferred stockholders: • Voting: In most cases, preferred stockholders are not allowed to vote for the board of directors. • Sharing in success: The cash dividends received by preferred stockholders are usually fixed in amount. If the company does exceptionally well, preferred stockholders do not get to share in the success.

13. Preferred Stock The protection enjoyed by preferred stockholders is: • Cash dividend preference: Preferred stockholders are entitled to receive their full cash dividend before any cash dividend can be issued to common stockholders. • Liquidation preference: If the company goes bankrupt, preferred stockholders are entitled to have their investment repaid in full, before common stockholders receive anything.

14. Preferred Stock Has the right to receive accumulated dividends before any dividends may be paid to common stockholders. Cumulative Non- Cumulative Has no right to “passed” dividends. Has claim to a portion of common dividends after receiving preferred dividends. Participating

15. Preferred Stock Permits the holder to exchange preferred stock for common stock. Convertible Permits the issuing company to redeem the preferred stock. Callable Permits the holder to redeem the stock—usually with some restrictions. Redeemable

16. Preferred Stock Dividends on cumulative preferred stock that are passed are referred to as dividends in arrears.

17. Preferred Stock And… dividends are not a liability until declared by the board of directors.

18. Preferred Stock Participating preferredstock issues provide for additional dividends to be paid to preferred stockholders after dividends of a specified amount are paid to common stockholders. Callable preferred stock is preferred stock that is redeemable at the option of the corporation. Redeemable preferred stock is preferred stock that is redeemable at the option of the stockholder.

19. Capital Stock Issued for Cash Goode Corporation issued 4,000 shares of $1 par common stock on April 1, 2005, for $45,000 cash. Apr. 1 Cash 45,000 Common Stock 4,000 Paid-In Capital in Excess of Par 41,000

20. Capital Stock Issued for Cash On April 1, 2005, Goode Corporation issued 4,000 shares of no-par common stock without a stated value for $45,000 cash. Apr. 1 Cash 45,000 Common Stock 45,000

21. Capital Stock Sold on Subscription On November 1, 2005, a firm received subscriptions for 5,000 shares of $1 par common at $12.50 per share with 50% down, balance due in 60 days. Nov. 1 Common Stock Subscription Receivable 62,500 Common Stock Subscribed 5,000 Paid-In Capital in Excess of Par 57,500

22. Capital Stock Sold on Subscription On November 1, 2005, a firm received subscriptions for 5,000 shares of $1 par common at $12.50 per share with 50% down, balance due in 60 days. Nov. 1 Cash 31,250 Common Stock Subscription Receivable 31,250

23. Capital Stock Sold on Subscription On December 9, received balance due on one-half of subscribers and issued stock to fully paid subscribers, 2,500 shares. Dec. 9 Cash 15,625 Common Stock Subscription Receivable 15,625 9 Common stock Subscribed 2,500 Common Stock 2,500

24. Stock Issued for Consideration Other Than Cash AC Company issues 200 shares of $0.50 par value common stock in return for land. The company’s stock is currently selling for $50 per share. Dec. 5 Land 10,000 Common Stock 100 Paid-In Capital in Excess of Par 9,900

25. Stock Issued for Consideration Other Than Cash Assume that the land has a readily determinable market price of $12,000, but AC Company’s common stock has no established fair market value. Dec. 5 Land 12,000 Common Stock 100 Paid-In Capital in Excess of Par 11,900

26. Stock Repurchases 1. Provide shares for incentive compensation and employee savings plans. 2. Obtain shares needed to satisfy requests by holders of convertible securities. 3. Reduce the amount of equity relative to the amount of debt. 4. Invest excess cash temporarily. Companies acquired their own stock to…

27. Stock Repurchases 5. Remove some shares from the open market in order to protect against a hostile takeover. 6. Improve per-share earnings by reducing the number of shares outstanding and returning inefficiently used assets to shareholders. 7. Display confidence that the stock is currently undervalued by the market.

28. Treasury Stock • Stock issued by a corporation but subsequently reacquired by the corporation and held for possible future reissuance or retirement. • Reported as a contra-equity account, not as an asset. • Does not create a gain or loss on reacquisition, reissuance, or retirement. • May decrease Retained Earnings, but cannot increase it.

29. Treasury Stock Issued 10,000, $1 par value shares at $15 per share Cost Method Cash 150,000 Common Stock. 10,000 Paid-In Capital in Excess of Par 140,000 Par Value Method Cash 150,000 Common Stock. 10,000 Paid-In Capital in Excess of Par 140,000

30. Treasury Stock Reacquired 1,000 shares at $40 per share. Cost Method Treasury Stock 40,000 Cash 40,000 Par Value Method Treasury Stock 1,000 Paid-In Capital in Excess of Par 14,000 Retained Earnings 25,000 Cash 40,000

31. Treasury Stock Sold 200 shares of treasury stock at $50 per share. Cost Method Cash 10,000 Treasury Stock 8,000 Paid-In Capital from Treasury Stock 2,000 Par Value Method Cash 10,000 Treasury Stock 200 Paid-In Capital in Excess of Par 9,800

32. Treasury Stock Sold 500 shares of treasury stock at $34 per share. Cost Method Cash 17,000 Paid-In Capital from Treasury Stock 2,000 Retained Earnings 1,000 Cash 20,000 Par Value Method Cash 17,000 Treasury Stock 500 Paid-In Capital in Excess of Par 16,500

33. Treasury Stock Retired remaining 300 shares of treasury stock. Cost Method Common Stock 300 Paid-In Capital in Excess of Par 4,200 Retained Earnings 7,500 Treasury Stock 12,000 Par Value Method Common Stock 300 Treasury Stock 300

34. Stock Rights, Warrants, and Options • Stock rights—Issued to existing shareholders to permit them to maintain their proportionate ownership interests when new shares are to be issued. • Stock warrants—Sold by the corporation for cash, generally in conjunction with the issuance of another security. • Stock options—Granted to officers or employees, usually as part of a compensation plan.

35. Stock Warrants Stewart Co. sells 1,000 shares of $50 par preferred stock for $58 per share. Stewart Co. gives the purchaser detachable warrants enabling the holders to subscribe to 1,000 shares of $2 par common stock for $25 per share. Immediately following the issuance of the stock, the warrants are selling for $3, and the fair market value of a preferred share without the warrant attached is $57.

36. Stock Warrants Value assigned to warrants $3 x = $58,000 $57 + $3 Value assigned to warrants Total issue price Market value of warrants x = Market value of security without warrants Market value of warrants + = $2,900

37. Stock Warrants The entry on Stewart’s book to record the sale of the preferred stock with detachable warrants is: Cash 58,000 Preferred Stock, $50 par 50,000 Paid-In Capital in Excess of Par--Preferred Stock 5,100 Common Stock Warrants 2,900

38. Stock Warrants If the warrants are exercised, the entry to record the issuance of common stock is: Common Stock Warrants 2,900 Cash 25,000 Common Stock, $2 par 2,000 Paid-In Capital in Excess of Par—Common Stock 25,900

39. Stock Warrants If these warrants were allowed to expired, what entry would be required? Common Stock Warrants 2,900 Paid-In Capital from Expired Warrants 2,900

40. 40 Stock-Based Compensation No Yes All employees eligible? No Compensatory Plan Shares offered equally? No Determine compensation expense; amortize over period employee is to provide service. Grant and Measurement dates same? Yes Reasonable exercise period? No Yes No Exercise Prices » Market Price? Estimate compensation expense; amortize over period employee is to provide service. No Number of shares and Exercise Price known? Non-compen- satory Plan Yes Determine actual expense; amortize over remaining period employee is to provide service. Record shares issued when stock is purchased. Record shares issued when stock is purchased. Adjust for Unearned Compensation, if any.

41. Stock-Based Compensation The company estimates a grant date value of $10 for each of the employee stock options. The total fair value of the options granted is $100,000. Compensation cost is allocated over three years from January 1, 2003 (the grant date) to January 1, 2006 (the vesting date). On January 1, 2003, the board of directors of Neff Company authorize the grant of 10,000 stock options. Each option permits the purchase of one share of Neff common stock at $50 per share.

42. 2003 Dec. 31 Compensation Expense 33,333 Paid-In Capital from Stock Options 33,333 $100,000 ÷ 3 Stock-Based Compensation Similar entries would be made in 2004 and 2005.

43. 2006 Dec. 31 Cash 500,000 Paid-In Capital from Stock Options 100,000 Common Stock (no par) 600,000 Stock-Based Compensation On December 31, 2006, all 10,000 of the options are exercised to purchase Neff’s no-par common stock.

44. 2006 Dec. 31 Paid-In Capital from Stock Options 600,000 Paid-In Capital from Expired Options 600,000 Stock-Based Compensation If the options had been allowed to expired, the following entry would have been necessary on December 31, 2006:

45. 2005 Dec. 31 Preferred Stock, $50 par 50,000 Paid-In Capital in Excess of Par—Preferred 10,000 Common Stock 4,000 Paid-In Capital in Excess of Par—Common 56,000 Stock Conversions Case 1 On December 31, 2005, 1,000 shares of preferred stock (par $50) are exchanged for 4,000 shares of common stock (par $1)

46. 2005 Dec. 31 Preferred Stock, $50 par 50,000 Paid-In Capital in Excess of Par—Preferred 10,000 Retained Earnings 20,000 Common Stock 80,000 Stock Conversions Case 2 On December 31, 2005, 1,000 shares of preferred stock (par $50) are exchanged for 4,000 shares of common stock (par $20)

47. Factors AffectingRetained Earnings Error corrections Some changes in accounting principle Net income Quasi-reorganizations Increases Retained Earnings

48. Factors AffectingRetained Earnings Decreases Some changes in accounting principles Cash and stock dividends Error corrections Prior period adjustments Treasury stock Net loss Retained Earnings

49. Accounting for Dividends • Declaration date: The date the corporation’s board of directors formally declares a dividend will be paid. • Date of record: The date on which stockholders of record are identified as those who will receive a dividend. • Date of payment: The date when the dividend is actually distributed to stockholders.

50. Cash Dividend ABC Corporation declares a $100,000 dividend; the following journal entries should be made: Declaration Date Dividends (Retained Earnings) 100,000 Dividends Payable 100,000 Payment Date Dividends Payable 100,000 Cash 100,000