The document discusses accounting procedures for corporations, including the accounting cycle, preparation of financial statements, and dividends. Key points:
1) The accounting cycle for corporations is the same as for sole proprietorships and partnerships, including preparing a worksheet and financial statements at the end of the accounting period.
2) Financial statements for corporations include the statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows.
3) Dividends can be paid to shareholders in cash, property, or scrip (shares), and there are dates for declaration, record, and payment that impact accounting entries.
The document discusses accounting procedures for corporations, including the accounting cycle, preparation of financial statements, and dividends. Key points:
1) The accounting cycle for corporations is the same as for sole proprietorships and partnerships, including preparing a worksheet and financial statements at the end of the accounting period.
2) Financial statements for corporations include the statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows.
3) Dividends can be paid to shareholders in cash, property, or scrip (shares), and there are dates for declaration, record, and payment that impact accounting entries.
The document discusses accounting procedures for corporations, including the accounting cycle, preparation of financial statements, and dividends. Key points:
1) The accounting cycle for corporations is the same as for sole proprietorships and partnerships, including preparing a worksheet and financial statements at the end of the accounting period.
2) Financial statements for corporations include the statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows.
3) Dividends can be paid to shareholders in cash, property, or scrip (shares), and there are dates for declaration, record, and payment that impact accounting entries.
The document discusses accounting procedures for corporations, including the accounting cycle, preparation of financial statements, and dividends. Key points:
1) The accounting cycle for corporations is the same as for sole proprietorships and partnerships, including preparing a worksheet and financial statements at the end of the accounting period.
2) Financial statements for corporations include the statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows.
3) Dividends can be paid to shareholders in cash, property, or scrip (shares), and there are dates for declaration, record, and payment that impact accounting entries.
FRANCHESKA F. ATENDIDO CFAS BOOK | SECOND SEMESTER
CHAPTER 9: OPERATIONS, DIVIDENDS, BOOK VALUE PER SHARE, AND EARNINGS PER SHARE
ACCOUNTING CYCLE OF A CORPORATION Statement of comprehensive income
• Reports gains and losses not reported as part of Accounting cycle are the SAME: profit or loss but shown as adjustment to total 1. Sole Proprietorship equity 2. Partnership • Changes in FV of available for sale securities 3. Corporation • Revaluation surplus from evaluation of PPE
At the end of the accounting period the following are Securities and Exchange Commission (SEC) prepared: • Requires corporation submit the cash flows w/in 15 days from the end of the first 3 months of 1. Preparation of worksheet operations (covering 3 months from the 2. Preparation of financial statements registration date) a. Statement of Financial Position (balance o source sheet) o disbursement b. Income statement a. share premium related to c. Statement of comprehensive income business d. Statement of changes in shareholders’ b. no loans or advances to equity shareholders/officers e. Statement of cash flows STATEMENT OF FINANCIAL POSITION 3. Preparation of adjusting and closing entries (BALANCE SHEET) PREPARATION OF A WORKSHEET Balance sheet • Financial condition as of a particular date Worksheet – working paper that facilities the preparation o Assets, liabilities, and equity of financial statements. • Shareholders’ equity/stockholders’ equity • Usual: 8 columns o Contributed capital – capital from • Addition for Retained Earnings: 10 columns investment by shareholders a. Share capital or capital stock – Data requiring adjustments at the end of the accounting legal capital period: b. legal stock 1. Accrued expense o Retained earnings 2. Accrued income o Some cases: corporation may have 3. Deferred expense or prepaid expense revaluations surplus and net unrealized 4. Deferred income or unearned income gain or loss on long investments 5. Uncollectible accounts 6. Depreciation and other cost allocation 7. Income tax
PREPARATION OF FINANCIAL STATEMENTS
Financial statements – end product of accounting process
• taken from worksheet • PAS 1 a. Statement of Financial Position (balance sheet) b. Statement of comprehensive income (or separate income statement of other comprehensive income) • Description for share capital: c. Statement of changes in equity o Par/stated value, authorized shares, d. Statement of cash flows number of issued, dividend rights (PS) e. Notes • Share capital subscription receivable (non- current) – deducted from SC subscribed • Retained earnings adjusting entry Dr. Retained earnings (deficit, loss) FRANCHESKA F. ATENDIDO CFAS BOOK | SECOND SEMESTER
Cr. Retained earnings (normal bal., gain)
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF CHANGES IN EQUITY
Statement of Changes in Equity – reports items that
cause changes in its account balances • Profit or loss for the period • Other comprehensive income • Capital share transactions and distributions • Balance of retained earnings
DIVIDENDS
1. Distribution to shareholders of corporate earnings
• Cash • Non-cash assets • Notes or other evidence of indebtness • Shares of company’s own SC 2. Liquidating dividend – dividends paid out of accumulated earnings 3. Board of directors – power to declare dividends
Dates of announcements Date of declaration BOD approved resolution to distribute Liability recorded Date of record • Determines shareholders entitled to the receipt of declared dividends • No entry • List of registered shareholders is made as of the close of business o Selling dividends before this date o Selling ex-dividends after this date Date of Dividends were paid/distributed payment/distribution Liability is cancelled/extinguished
FRANCHESKA F. ATENDIDO CFAS BOOK | SECOND SEMESTER
Dividends/Bonus In cash Deferred cash dividends Non-cash assets Distribution of own SC (stock) Stocks of other Declared when RE bal. companies corporation Transfer of retained earnings to sufficient but not sufficient owned contributed capital funds for cash dividend >20%=small, FMV (Retained Written promise to pay Earnings) -RE, +SC, +SP (principal + interest) <20%=large, par (Retained Earnings) -RE, +SC Retained Earnings Retained Earnings Equity Investments SMALL Cash Dividends Payable Scrip Dividends (FV-BV) Payable Unrealized Holding Ret. Earn. 1.3M Cash Dividends Payable Gain or Loss— OS Dividend Distributable 1M Cash Scrip Dividends Payable Income (FV-BV) SP – Ordinary 300k Interest Expense (outs. sh. x fmv/par) Cash Retained Earnings Property Dividends OS Dividend Distributable 1M Payable (@FV) SC – Ordinary 1M
Property Dividends LARGE
Payable Equity Investments/ Ret. Earn. 3M Investments in P. OS Div. Dist. 3M (noncurrent) @(FV) 1M sh x 30% x 10 par = 3M
OS Div. Dist. 3M SC-Ordinary 3M On declaration: CDP is current liability in SFP
CDP declared should not
exceed the amount of cash in SFP
Peso dividend = Peso div. x
# outstanding shares
Percentage dividend = % x total par/stated value of SC
*declaration and payment of dividends (Cash, Property, Scrip)
• no effect on shares issued and outstanding • decrease total assets and total earnings *declaration and payment of dividends (Share Capital) • no effect on total assets and total SHE • decrease retained earnings, increase contributed capital
FRANCHESKA F. ATENDIDO CFAS BOOK | SECOND SEMESTER
DIVIDENDS ON PREFERENCE SHARES
Cumulative Entitled to the payment of past
years’ unpaid dividends Previous years + current yr. paid Horizontal
Dividends in arrears – not
liabilitiy Noncumulative Entitled to current year’s dividend only Horizontal Participating Entitled to additional dividends after payment of regular dividends to PS and OS Vertical
Fully participating – regular div.
+ excess shares
Only up to 20% – compare orig.
8% and Added 12% which is low
Additional 2% - compare orig.
8% and additional 2% which is low Nonparticipating Not entitled to any excess dividends
All excess go to OS Convertible Exchanged or converted to Ordinary share at the option of the shareholder Redeemable Called or redeemed at a specified future dates and at stipulated price at the option of the issuing company
Retirement of shares
Gain/loss share premium
Basic earnings per share Full Participation Rate = Excess dividends / Outstanding Amount earned during given period on each ordinary shares outstanding share
BOOK VALUE PER SHARE (PSC and OSC) BASIC EPS = Net income/# Outstanding ordinary shares
If issued ORDINARY only
BVOS = Total SHE/ #Outstanding OS
Amount each share would receive if the company was
liquidated on the amounts reported on SFP
If BOTH PSC and OSC
BASIC EARNINGS PER SHARE (OSC only)
FRANCHESKA F. ATENDIDO CFAS BOOK | SECOND SEMESTER
CESAR V. AREZA and LOLITA B. AREZA, Petitioners, vs. EXPRESS SAVINGS BANK, INC. and MICHAEL POTENCIANO, Respondents. G.R. No. 176697 September 10, 2014 PDF
CESAR V. AREZA and LOLITA B. AREZA, Petitioners, vs. EXPRESS SAVINGS BANK, INC. and MICHAEL POTENCIANO, Respondents. G.R. No. 176697 September 10, 2014 PDF
