The document discusses various aspects of owners' equity, including:
- Owners' equity represents the investment made by owners in a business.
- Statements of owners' equity track the capital contributed and any profits/losses of a business over time.
- Different types of business organizations (sole proprietorships, partnerships, companies) have different structures for owners' equity and liability.
- Companies establish authorized, issued, and paid-up share capital through the issuance of ordinary and preference shares. Reserves are also part of owners' equity.
IAS 40 provides guidance on accounting for investment property, which is property held to earn rentals or for capital appreciation rather than for use in production. It requires investment property to be initially measured at cost and then either at fair value or cost model after initial recognition. Under the fair value model, all changes in fair value are recognized in profit or loss for the period. The standard also provides guidance on transfers, disposals, disclosures and transitional provisions for investment property.
This document summarizes the key aspects of IAS 36 regarding impairment of assets. IAS 36 aims to ensure assets are not carried at more than their recoverable amount. It defines terms like carrying amount, cash-generating units and impairment loss. The standard outlines how to identify impaired assets, measure recoverable amount, recognize impairment losses, allocate losses to cash-generating units including goodwill, and reverse impairment losses. Entities must disclose impairment losses, reversals and reasons for changes in carrying amounts.
Earnings per share is a ratio used to analyze financial statements that measures a company's profit allocated to each outstanding share of common stock. International Accounting Standard 33 was developed to standardize how earnings per share is calculated, which involves dividing earnings attributable to ordinary shareholders by the weighted average number of ordinary shares. There are two types of earnings per share calculations: basic EPS uses actual ordinary shares outstanding, while diluted EPS considers additional potential ordinary shares, such as from convertible bonds, that would lower per-share earnings if converted.
The document provides an overview of consolidated financial statements. It discusses how a parent company combines the financial statements of its subsidiaries by eliminating reciprocal accounts and adjusting for the difference between the parent's cost of its investment and the book value of the subsidiary's underlying equity. The objectives covered include recognizing the benefits of consolidated statements, requirements for inclusion of subsidiaries, allocating excess investment costs, preparing consolidated balance sheets at acquisition and subsequent periods, accounting for minority interests, and preparing consolidated income statements.
This document summarizes IAS 36 on impairment of assets. The key points are:
1) IAS 36 aims to ensure assets are carried at no more than their recoverable amount, which is defined as the higher of an asset's fair value less costs of disposal and its value in use.
2) An impairment loss occurs when an asset's carrying amount exceeds its recoverable amount and must be recognized.
3) Recoverable amount is determined based on external factors like market changes or internal factors like physical damage.
4) A cash-generating unit is the smallest group of assets that generates cash inflows independently of other assets.
- IAS 33 provides guidance on calculating and presenting earnings per share (EPS) and related disclosures. It covers entities with publicly traded ordinary shares or potential ordinary shares.
- EPS is calculated as basic EPS and diluted EPS. Basic EPS uses existing shares, while diluted EPS shows what EPS would be if all potential ordinary shares were issued. Both require adjusting earnings and shares for various factors.
- The standard outlines specific calculation methods and requires disclosure of EPS amounts and reconciliations in the financial statements.
This document summarizes IAS 36 on impairment of assets. The key points are:
1) IAS 36 aims to ensure assets are carried at no more than their recoverable amount, which is defined as the higher of an asset's fair value less costs of disposal and its value in use.
2) An impairment loss occurs when an asset's carrying amount exceeds its recoverable amount and must be recognized.
3) Recoverable amount is determined based on external factors like market changes or internal factors like physical damage.
4) A cash-generating unit is the smallest group of assets that generates cash inflows independently of other assets.
IAS 40 provides guidance on accounting for investment property, which is property held to earn rentals or for capital appreciation rather than for use in production. It requires investment property to be initially measured at cost and then either at fair value or cost model after initial recognition. Under the fair value model, all changes in fair value are recognized in profit or loss for the period. The standard also provides guidance on transfers, disposals, disclosures and transitional provisions for investment property.
This document summarizes the key aspects of IAS 36 regarding impairment of assets. IAS 36 aims to ensure assets are not carried at more than their recoverable amount. It defines terms like carrying amount, cash-generating units and impairment loss. The standard outlines how to identify impaired assets, measure recoverable amount, recognize impairment losses, allocate losses to cash-generating units including goodwill, and reverse impairment losses. Entities must disclose impairment losses, reversals and reasons for changes in carrying amounts.
Earnings per share is a ratio used to analyze financial statements that measures a company's profit allocated to each outstanding share of common stock. International Accounting Standard 33 was developed to standardize how earnings per share is calculated, which involves dividing earnings attributable to ordinary shareholders by the weighted average number of ordinary shares. There are two types of earnings per share calculations: basic EPS uses actual ordinary shares outstanding, while diluted EPS considers additional potential ordinary shares, such as from convertible bonds, that would lower per-share earnings if converted.
The document provides an overview of consolidated financial statements. It discusses how a parent company combines the financial statements of its subsidiaries by eliminating reciprocal accounts and adjusting for the difference between the parent's cost of its investment and the book value of the subsidiary's underlying equity. The objectives covered include recognizing the benefits of consolidated statements, requirements for inclusion of subsidiaries, allocating excess investment costs, preparing consolidated balance sheets at acquisition and subsequent periods, accounting for minority interests, and preparing consolidated income statements.
This document summarizes IAS 36 on impairment of assets. The key points are:
1) IAS 36 aims to ensure assets are carried at no more than their recoverable amount, which is defined as the higher of an asset's fair value less costs of disposal and its value in use.
2) An impairment loss occurs when an asset's carrying amount exceeds its recoverable amount and must be recognized.
3) Recoverable amount is determined based on external factors like market changes or internal factors like physical damage.
4) A cash-generating unit is the smallest group of assets that generates cash inflows independently of other assets.
- IAS 33 provides guidance on calculating and presenting earnings per share (EPS) and related disclosures. It covers entities with publicly traded ordinary shares or potential ordinary shares.
- EPS is calculated as basic EPS and diluted EPS. Basic EPS uses existing shares, while diluted EPS shows what EPS would be if all potential ordinary shares were issued. Both require adjusting earnings and shares for various factors.
- The standard outlines specific calculation methods and requires disclosure of EPS amounts and reconciliations in the financial statements.
This document summarizes IAS 36 on impairment of assets. The key points are:
1) IAS 36 aims to ensure assets are carried at no more than their recoverable amount, which is defined as the higher of an asset's fair value less costs of disposal and its value in use.
2) An impairment loss occurs when an asset's carrying amount exceeds its recoverable amount and must be recognized.
3) Recoverable amount is determined based on external factors like market changes or internal factors like physical damage.
4) A cash-generating unit is the smallest group of assets that generates cash inflows independently of other assets.
This document summarizes the key aspects of IAS 23 Borrowing Costs. It defines borrowing costs and qualifying assets. For qualifying assets, borrowing costs directly attributable to the acquisition or construction must be capitalized as part of the asset cost, while other borrowing costs are expensed. Capitalization begins when expenditures are incurred, borrowing costs are incurred, and activities necessary for intended use/sale begin, and ceases when activities are substantially complete. An entity must disclose the amount of borrowing costs capitalized and capitalization rate used.
The document provides an overview of accounting for intangible assets under IAS 38. It discusses the definition of intangible assets, recognition criteria, measurement at cost or fair value, amortization of intangible assets with finite useful lives, impairment testing, and disclosure requirements. The document also covers topics such as government grants, internally generated intangible assets, revaluation model, and differences between IFRS and Indian GAAP treatment of intangible assets.
This document summarizes IAS 40 on investment property. It defines investment property as property held to earn rentals or for capital appreciation rather than for use in production. It outlines the classification, recognition, measurement and disclosure requirements for investment property according to IAS 40, including initial measurement at cost and the option to use the fair value model or cost model for subsequent measurement. It also discusses transfers, disposals and specific disclosure requirements.
This document provides an introduction to investment terminology and concepts. It defines key terms like finance, investment, investor, and differentiates investment from speculation and gambling. It also outlines the major participants in the financial system including households, businesses, governments, banks, insurers, pension funds, and mutual funds. Finally, it describes different types of financial securities and markets.
This standard outlines the accounting treatment and disclosure requirements for investment property. It defines investment property as property held to earn rentals or for capital appreciation rather than for short-term sale or use in production. The standard specifies that investment property is initially recognized at cost and can be subsequently measured using either the cost or fair value model. It also provides guidance on transfers to or from investment property, disposal of investment property, and impairment of investment property. Extensive disclosure requirements are specified regarding investment property balances, fair values, rental income and expenses, and restrictions.
This chapter introduces corporate finance and the role of the financial manager. It discusses the basic types of financial management decisions around capital budgeting, capital structure, and working capital management. The chapter also outlines the main forms of business organization - sole proprietorships, partnerships, and corporations - and explains that the goal of financial management is to maximize the value of the company for its shareholders. It describes agency problems that can arise between managers and owners and how corporations address this issue. Finally, it provides an overview of primary and secondary financial markets.
Overview of financial reporting environmentHome Study
This document provides an overview of the key statutory and regulatory requirements that govern financial reporting in Malaysia, including the Companies Act 1965, Securities Commission guidelines, KLSE listing requirements, and the roles of the MASB and FRF in setting accounting standards. It outlines the legal and regulatory frameworks that companies must comply with to ensure transparency and reliability of financial information.
1) The chapter defines key terms related to consolidation such as control, subsidiary, parent, non-controlling interest, and consolidated financial statements.
2) Assessing control of an investee involves considering its purpose and design, how decisions about relevant activities are made, and who has the ability to direct activities and receive returns.
3) Consolidation procedures require combining like items of the parent and subsidiaries, offsetting the parent's investment, and eliminating intragroup balances and transactions.
The document discusses key concepts related to financial reporting including:
1) Financial reporting provides formal records of a company's financial activities primarily for external users like shareholders and internal users like management. Annual reports contain key documents like directors reports and financial statements.
2) There are various forms of business organization but joint stock companies have features like limited liability, transferable shares, and elected management through directors.
3) The objective of financial reporting is to provide useful information to investors and creditors to make decisions about providing resources to an entity. Reports are limited and users need other sources of information as well.
The document discusses the key components and classification of cash flows in a cash flow statement. It defines operating, investing, and financing cash flows and provides examples of cash inflows and outflows for each classification. The direct and indirect methods for determining cash flows from operations are also described. Additional information required from the income statement, balance sheet, and other sources is outlined. The uses and limitations of the cash flow statement are listed. Finally, the document includes a sample format for the cash flow statement.
Bonds are debt instruments where an investor loans money to an entity for a set period of time at a fixed or variable interest rate. There are various types of bonds including corporate bonds issued by companies, municipal bonds issued by state and local governments, and U.S. Treasury bonds issued by the federal government. Bonds can have different features such as being callable or convertible. They can also be secured by specific assets or unsecured. Bond issuers look to bonds as a way to raise funds for a period of time while investors seek bonds as a conservative way to earn income. However, bonds carry various risks including interest rate risk, credit risk, and liquidity risk.
IFRS 3 provides guidance on accounting for business combinations. It defines a business combination as the acquisition of one business by another. The standard outlines the acquisition method for accounting, which requires identifying the acquirer, determining the acquisition date, recognizing and measuring identifiable assets and liabilities, and recognizing goodwill or a gain from a bargain purchase. Consideration transferred in a business combination is measured at fair value. Exceptions to the recognition and measurement principles are provided for items such as income taxes, contingent liabilities, and share-based payments.
Accounting
Cambridge A Level 9706
Financial Accounting
Paper 3
Company Accounts
Public Limited Company Accounts
Cash Flow Statements (IAS 07)
Indirect Method
Operating Activities
Investment Activities
Financing Activities
Online Classes
an effective document for accounting classes specially during this covid 19 (Corona) situation
Past papers and model questions
short notes
online support to get clarified all the doubts
Contact : Wtsapp : +94779035940
Instagram : Sanjaya_Jayasundara
Facebook: Accounting with Sanjaya Sir
IFRS 3 establishes principles for accounting for business combinations. It requires acquirers to recognize identifiable assets acquired, liabilities assumed and any non-controlling interest at fair value. Goodwill is recognized as the excess of consideration transferred over the fair value of identifiable net assets. The acquisition method involves 4 steps - identifying the acquirer, determining the acquisition date, recognizing and measuring assets, liabilities and non-controlling interest, and recognizing and measuring goodwill or gain on bargain purchase. IFRS 3 also provides guidance on specific transactions like business combinations achieved in stages and accounting for acquisition costs.
This document discusses long-term liabilities such as bonds and long-term notes payable. It describes the major characteristics of bonds, including types of bonds and how they are issued. It explains how to account for bond transactions such as issuing bonds at face value, a discount, or premium. It also discusses accounting for long-term notes payable, including recording mortgage notes payable. Finally, it discusses presentation of long-term liabilities on the balance sheet.
The document provides an overview of IAS 36 Impairment of Assets, including the standard's objective to ensure assets are reported at no more than their recoverable amount. It discusses identifying impaired assets, calculating recoverable amount, recognizing impairment losses, reversing impairments, and disclosure requirements. Examples are provided for testing assets and cash-generating units for impairment.
The document discusses the Sarbanes-Oxley Act and the entities involved in ensuring integrity and transparency in financial reporting for public companies. It outlines the roles of the SEC, PCAOB, independent audit firms, audit committees, internal audit functions, and CEOs and CFOs in establishing standards and oversight of financial audits and internal controls. Key provisions of the Act require auditors and audit committees to follow new standards and rotation policies, and make CEOs and CFOs legally responsible for the accuracy of financial reports.
IAS 1 provides the requirements for presenting general purpose financial statements to ensure comparability. It sets out guidelines for the structure of financial statements and minimum requirements for content. Financial statements must include a statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows. Notes to the financial statements must also be presented. IAS 1 specifies the components that must be presented in each financial statement and note disclosure requirements.
Ch 19 share-based compensation and epsMarcusHuang6
This document discusses various types of stock-based compensation plans and how they are accounted for. It summarizes how restricted stock plans and stock option plans provide employees shares or options to purchase shares, and how the fair value of these awards is recorded as compensation expense over the vesting period. It also discusses how earnings per share is calculated, including the calculation of basic EPS using the weighted average shares outstanding and the calculation of diluted EPS which considers additional potential common shares from options, convertible securities, and contingently issuable shares.
Corporations are legal entities that allow for ownership shares to be traded publicly. They have a separate legal existence from owners and can raise large amounts of capital through stock sales. Ownership is represented by shares of stock. Corporations are controlled by shareholders who elect a board of directors to oversee management. They provide advantages like limited liability but are also subject to double taxation.
This document discusses shareholders' equity in corporations. It defines shareholders' equity as the owners' claim against corporate assets, distinguished from capital accounts for sole proprietorships and partnerships. The document outlines the key elements of shareholders' equity including ordinary shares, preference shares, legal capital, and the trust fund doctrine protecting creditors. It also provides examples of accounting for share capital transactions and calculating shareholders' equity amounts.
This document summarizes the key aspects of IAS 23 Borrowing Costs. It defines borrowing costs and qualifying assets. For qualifying assets, borrowing costs directly attributable to the acquisition or construction must be capitalized as part of the asset cost, while other borrowing costs are expensed. Capitalization begins when expenditures are incurred, borrowing costs are incurred, and activities necessary for intended use/sale begin, and ceases when activities are substantially complete. An entity must disclose the amount of borrowing costs capitalized and capitalization rate used.
The document provides an overview of accounting for intangible assets under IAS 38. It discusses the definition of intangible assets, recognition criteria, measurement at cost or fair value, amortization of intangible assets with finite useful lives, impairment testing, and disclosure requirements. The document also covers topics such as government grants, internally generated intangible assets, revaluation model, and differences between IFRS and Indian GAAP treatment of intangible assets.
This document summarizes IAS 40 on investment property. It defines investment property as property held to earn rentals or for capital appreciation rather than for use in production. It outlines the classification, recognition, measurement and disclosure requirements for investment property according to IAS 40, including initial measurement at cost and the option to use the fair value model or cost model for subsequent measurement. It also discusses transfers, disposals and specific disclosure requirements.
This document provides an introduction to investment terminology and concepts. It defines key terms like finance, investment, investor, and differentiates investment from speculation and gambling. It also outlines the major participants in the financial system including households, businesses, governments, banks, insurers, pension funds, and mutual funds. Finally, it describes different types of financial securities and markets.
This standard outlines the accounting treatment and disclosure requirements for investment property. It defines investment property as property held to earn rentals or for capital appreciation rather than for short-term sale or use in production. The standard specifies that investment property is initially recognized at cost and can be subsequently measured using either the cost or fair value model. It also provides guidance on transfers to or from investment property, disposal of investment property, and impairment of investment property. Extensive disclosure requirements are specified regarding investment property balances, fair values, rental income and expenses, and restrictions.
This chapter introduces corporate finance and the role of the financial manager. It discusses the basic types of financial management decisions around capital budgeting, capital structure, and working capital management. The chapter also outlines the main forms of business organization - sole proprietorships, partnerships, and corporations - and explains that the goal of financial management is to maximize the value of the company for its shareholders. It describes agency problems that can arise between managers and owners and how corporations address this issue. Finally, it provides an overview of primary and secondary financial markets.
Overview of financial reporting environmentHome Study
This document provides an overview of the key statutory and regulatory requirements that govern financial reporting in Malaysia, including the Companies Act 1965, Securities Commission guidelines, KLSE listing requirements, and the roles of the MASB and FRF in setting accounting standards. It outlines the legal and regulatory frameworks that companies must comply with to ensure transparency and reliability of financial information.
1) The chapter defines key terms related to consolidation such as control, subsidiary, parent, non-controlling interest, and consolidated financial statements.
2) Assessing control of an investee involves considering its purpose and design, how decisions about relevant activities are made, and who has the ability to direct activities and receive returns.
3) Consolidation procedures require combining like items of the parent and subsidiaries, offsetting the parent's investment, and eliminating intragroup balances and transactions.
The document discusses key concepts related to financial reporting including:
1) Financial reporting provides formal records of a company's financial activities primarily for external users like shareholders and internal users like management. Annual reports contain key documents like directors reports and financial statements.
2) There are various forms of business organization but joint stock companies have features like limited liability, transferable shares, and elected management through directors.
3) The objective of financial reporting is to provide useful information to investors and creditors to make decisions about providing resources to an entity. Reports are limited and users need other sources of information as well.
The document discusses the key components and classification of cash flows in a cash flow statement. It defines operating, investing, and financing cash flows and provides examples of cash inflows and outflows for each classification. The direct and indirect methods for determining cash flows from operations are also described. Additional information required from the income statement, balance sheet, and other sources is outlined. The uses and limitations of the cash flow statement are listed. Finally, the document includes a sample format for the cash flow statement.
Bonds are debt instruments where an investor loans money to an entity for a set period of time at a fixed or variable interest rate. There are various types of bonds including corporate bonds issued by companies, municipal bonds issued by state and local governments, and U.S. Treasury bonds issued by the federal government. Bonds can have different features such as being callable or convertible. They can also be secured by specific assets or unsecured. Bond issuers look to bonds as a way to raise funds for a period of time while investors seek bonds as a conservative way to earn income. However, bonds carry various risks including interest rate risk, credit risk, and liquidity risk.
IFRS 3 provides guidance on accounting for business combinations. It defines a business combination as the acquisition of one business by another. The standard outlines the acquisition method for accounting, which requires identifying the acquirer, determining the acquisition date, recognizing and measuring identifiable assets and liabilities, and recognizing goodwill or a gain from a bargain purchase. Consideration transferred in a business combination is measured at fair value. Exceptions to the recognition and measurement principles are provided for items such as income taxes, contingent liabilities, and share-based payments.
Accounting
Cambridge A Level 9706
Financial Accounting
Paper 3
Company Accounts
Public Limited Company Accounts
Cash Flow Statements (IAS 07)
Indirect Method
Operating Activities
Investment Activities
Financing Activities
Online Classes
an effective document for accounting classes specially during this covid 19 (Corona) situation
Past papers and model questions
short notes
online support to get clarified all the doubts
Contact : Wtsapp : +94779035940
Instagram : Sanjaya_Jayasundara
Facebook: Accounting with Sanjaya Sir
IFRS 3 establishes principles for accounting for business combinations. It requires acquirers to recognize identifiable assets acquired, liabilities assumed and any non-controlling interest at fair value. Goodwill is recognized as the excess of consideration transferred over the fair value of identifiable net assets. The acquisition method involves 4 steps - identifying the acquirer, determining the acquisition date, recognizing and measuring assets, liabilities and non-controlling interest, and recognizing and measuring goodwill or gain on bargain purchase. IFRS 3 also provides guidance on specific transactions like business combinations achieved in stages and accounting for acquisition costs.
This document discusses long-term liabilities such as bonds and long-term notes payable. It describes the major characteristics of bonds, including types of bonds and how they are issued. It explains how to account for bond transactions such as issuing bonds at face value, a discount, or premium. It also discusses accounting for long-term notes payable, including recording mortgage notes payable. Finally, it discusses presentation of long-term liabilities on the balance sheet.
The document provides an overview of IAS 36 Impairment of Assets, including the standard's objective to ensure assets are reported at no more than their recoverable amount. It discusses identifying impaired assets, calculating recoverable amount, recognizing impairment losses, reversing impairments, and disclosure requirements. Examples are provided for testing assets and cash-generating units for impairment.
The document discusses the Sarbanes-Oxley Act and the entities involved in ensuring integrity and transparency in financial reporting for public companies. It outlines the roles of the SEC, PCAOB, independent audit firms, audit committees, internal audit functions, and CEOs and CFOs in establishing standards and oversight of financial audits and internal controls. Key provisions of the Act require auditors and audit committees to follow new standards and rotation policies, and make CEOs and CFOs legally responsible for the accuracy of financial reports.
IAS 1 provides the requirements for presenting general purpose financial statements to ensure comparability. It sets out guidelines for the structure of financial statements and minimum requirements for content. Financial statements must include a statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows. Notes to the financial statements must also be presented. IAS 1 specifies the components that must be presented in each financial statement and note disclosure requirements.
Ch 19 share-based compensation and epsMarcusHuang6
This document discusses various types of stock-based compensation plans and how they are accounted for. It summarizes how restricted stock plans and stock option plans provide employees shares or options to purchase shares, and how the fair value of these awards is recorded as compensation expense over the vesting period. It also discusses how earnings per share is calculated, including the calculation of basic EPS using the weighted average shares outstanding and the calculation of diluted EPS which considers additional potential common shares from options, convertible securities, and contingently issuable shares.
Corporations are legal entities that allow for ownership shares to be traded publicly. They have a separate legal existence from owners and can raise large amounts of capital through stock sales. Ownership is represented by shares of stock. Corporations are controlled by shareholders who elect a board of directors to oversee management. They provide advantages like limited liability but are also subject to double taxation.
This document discusses shareholders' equity in corporations. It defines shareholders' equity as the owners' claim against corporate assets, distinguished from capital accounts for sole proprietorships and partnerships. The document outlines the key elements of shareholders' equity including ordinary shares, preference shares, legal capital, and the trust fund doctrine protecting creditors. It also provides examples of accounting for share capital transactions and calculating shareholders' equity amounts.
Corporate Reporting- Limited Companies: Statement of Financial PositionDayana Mastura FCCA CA
This document discusses different types of shares and reserves that appear on a company's statement of financial position. It defines preference shares, cumulative and non-cumulative preference shares, and how they impact dividends. It also defines ordinary shares, share capital, share premium, revenue reserves like retained earnings, and capital reserves like share premium and revaluation reserves. Examples are provided to illustrate calculating dividends and the value of ordinary shares. Liabilities and provisions are also briefly defined.
Corporations have several key characteristics including separate legal entity status, limited liability for shareholders, transferable ownership through share trading, and continuous life regardless of ownership changes. A corporation is formed through registration and establishes a board of directors elected by shareholders to oversee policy and delegate daily operations. Financial statements include an income statement, statement of retained earnings, and balance sheet that account for transactions involving shares, earnings, dividends and retained earnings.
This document provides an overview of Chapter 14 which covers corporations, dividends, retained earnings, and income reporting. The chapter objectives are to prepare entries for cash and stock dividends, identify items in a retained earnings statement, prepare and analyze the stockholders' equity section, describe corporation income statements, and compute earnings per share. Key topics covered include types of dividends, entries for cash and stock dividends, retained earnings statement presentation and analysis, stockholders' equity presentation and analysis, and income statement presentation and analysis.
ch12 CORPORATIONS ORGANIZATION, STOCK TRANSACTIONS, DIVIDENDS, AND RETAINED E...JemalSeid25
This document provides an overview and learning objectives for a chapter on corporations from a financial accounting textbook. The chapter will cover the organization, stock transactions, dividends, and retained earnings of corporations. It will address topics like common vs preferred stock, accounting for stock issuances and dividends, and the preparation of stockholders' equity statements. The document includes sample journal entries, illustrations, and previews of the key sections to be covered in the chapter.
Ratio analysis involves calculating and comparing various financial ratios to evaluate a company's profitability, liquidity, asset use efficiency, and financial stability. Key ratios include return on investment, return on equity, debt-to-equity, and current ratio. Calculating ratios from multiple periods or against industry benchmarks provides insights into a company's performance over time and relative to its peers.
Ratio analysis involves calculating and comparing various financial ratios to evaluate a company's profitability, liquidity, asset use efficiency, and financial stability. Key ratios include return on investment, return on equity, debt-to-equity, and current ratio. Calculating ratios from multiple periods or against industry benchmarks provides insights into a company's performance over time and relative to its peers.
This chapter discusses accounting for intercorporate investments and consolidations. It covers short-term and long-term investments in debt and equity securities, as well as the market and equity methods for accounting for investments. The chapter also addresses preparing consolidated financial statements, accounting for minority interests, goodwill, and impairment of goodwill.
This document discusses various ways that public limited companies can manage their share capital, including issuing new shares, consolidating shares, subdividing shares, issuing bonus shares, and issuing rights shares. It provides examples of how companies may consolidate shares into larger denominations or subdivide shares into smaller denominations. It explains that bonus shares are issued to lower the share price and dividend rate to appeal to smaller investors, while rights shares allow existing shareholders to purchase additional shares at a discount. The advantages to companies of issuing bonus shares include conserving cash, addressing financial difficulties, and remedying under-capitalization.
This document provides information about preparing a balance sheet and profit and loss statement. It begins with an introduction to the topic. It then defines key components of the financial statements including expenses, income, assets, and liabilities. The document provides examples of typical profit and loss statement and balance sheet formats. It includes vertical and horizontal examples. It also includes notes that would typically accompany the statements. Finally, it provides general instructions for preparing the balance sheet according to the Companies Act of 2013. In summary, the document outlines the components and required formats for basic financial statements along with examples and notes.
This document provides an overview of accounting concepts including:
- Owner-managers run owner-managed businesses while creditors lend money and investors buy ownership in the form of stock.
- Financial accounting collects and processes financial information to produce reports for internal and external decision-makers.
- The main financial statements are the income statement, balance sheet, statement of retained earnings, and statement of cash flows.
- The income statement reports revenues and expenses to determine net income/loss over an accounting period using accrual accounting.
- The balance sheet lists assets, liabilities, and equity on a given date based on the accounting equation Assets = Liabilities + Equity.
Holding company accounts and consolidated Balance SheetAugustin Bangalore
1. The document discusses concepts related to holding companies including analysis of capital profits, calculation of capital reserve/goodwill, treatment of minority interest, and preparation of consolidated balance sheets.
2. Capital profits refer to profits of a subsidiary earned prior to acquisition by the holding company. Revenue profits are earned after the acquisition date.
3. In a consolidated balance sheet, common transactions between the holding company and subsidiary like bills receivable/payable are eliminated to show only balances with outside parties.
The document provides an overview of financial statements and accounting. It discusses the key players in a business, the accounting system and financial statements. The four basic financial statements are the balance sheet, income statement, statement of retained earnings, and statement of cash flows. It also discusses accounting principles, auditing, business entities, careers in accounting and related topics.
The document provides an overview of financial statements and accounting. It discusses the key players in a business, the accounting system and financial statements. The four basic financial statements are the balance sheet, income statement, statement of retained earnings, and statement of cash flows. It also discusses accounting principles, auditing, business entities, careers in accounting and related topics.
This document discusses equity accounting. It covers the key components of equity like ordinary shares, preference shares, retained earnings, and treasury shares. It discusses accounting for issuing shares including par value shares and no-par shares. It also covers accounting for treasury shares, preference shares, and dividends. The learning objectives cover characteristics of corporations, components of equity, procedures for issuing shares, accounting for treasury shares, preference shares, dividend policy, and presentation and analysis of equity.
IFRS 10 sets out the requirements for the preparation and presentation of consolidated financial statements when an entity controls one or more other entities (subsidiaries). The standard defines control and establishes control as the basis for consolidation. It sets out how to determine control and the accounting requirements for the preparation of consolidated financial statements, including accounting for changes in control. The standard also provides an exception to consolidation for entities that meet the definition of an investment entity.
This document discusses accounting for the issue, forfeiture, and re-issue of shares. It begins with an outline of the unit topics, including the meaning and types of shares, accounting for share issues, rights issues, bonus shares, and forfeiture and re-issue of shares. Several key aspects of share capital are defined, such as authorized, issued, subscribed, called-up, and paid-up capital. An example journal entry for a share issue transaction is provided. The document also covers equity shares, preference shares, and sweat equity shares.
The document discusses major classifications of cash flows according to accounting standard AS-3 and the importance of disclosing non-cash transactions. It covers cash flows from operating, investing and financing activities, and how non-cash transactions that significantly impact a company's financial position should be disclosed, either in a separate schedule or note. Key financial statements including the balance sheet, income statement and cash flow statement are also explained, along with their objectives, components and limitations.
The document discusses three methods for reporting investments in other companies: the fair value method, consolidation, and the equity method. The equity method is used when the investor has significant influence over the investee, usually through 20-50% ownership. Under the equity method, the investment is initially recorded at cost and adjusted to recognize the investor's share of earnings or losses. Special procedures address changes in accounting method, investee losses, and sale of the investment.
This document discusses segmentation and decentralization in organizations. It defines different types of responsibility centers such as cost centers, profit centers, and investment centers. It also discusses the benefits and disadvantages of decentralization. Additionally, it explains how to prepare segmented income statements using a contribution format by separating traceable fixed costs from common fixed costs. The document provides examples of how a company can segment its business by geographic regions or customer channels. It emphasizes that traceable costs of one segment can become common costs of another segment.
- Standards are benchmarks used to measure performance in managerial accounting. Quantity standards specify the input amounts, while price standards specify input costs.
- Direct material price and quantity variances are calculated to analyze differences between actual and standard costs. The price variance is the difference due to actual price paid, while the quantity variance is due to using more or less material than standard.
- An example calculates variances for a company that used 210kg of fiberfill costing $1,029 total to make 2,000 parkas. The $21 favorable price variance and $50 unfavorable quantity variance are determined.
This document provides an overview of budgeting and the budgeting process. It discusses why organizations create budgets, the basic framework of budgets including planning and control, and the advantages of budgeting such as defining goals and coordinating activities. The document also covers various types of budgets including operating budgets and continuous budgets. It discusses budgeting approaches like top-down versus bottom-up budgeting and incremental versus zero-based budgeting. Finally, it provides learning objectives about understanding basic budgeting terms and components of master budgets for different industries.
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2) Examples of sample spaces for experiments like coin tosses and dice rolls.
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A workshop hosted by the South African Journal of Science aimed at postgraduate students and early career researchers with little or no experience in writing and publishing journal articles.
2. Learning OutcomesLearning Outcomes
After studying this chapter, you should be able to:
• Explain the types of organizations and the various forms of
owners’ equity
• Explain the functions of Memorandum and Articles of
Associations
• Differentiate between ordinary shares and preference shares,
and their embedded rights and privileges
• Differentiate between authorized, issued, and paid up share
capital
• Describe issuance of share on application
• Explain various types of reserves
Financial Accounting and Reporting 1 2
3. Owners’ EquityOwners’ Equity
Investment made by owners in a
business or organization
Investment made by owners in a
business or organization
Financial Accounting and Reporting 1 3
4. Owners’ Equity of an EnterpriseOwners’ Equity of an Enterprise
Sri Asnat Enterprise
Statement of Owners’ Equity
For the Year Ended December 31, 2013
RM
Capital, January 1 20,000
Add: Net Profit 3,400
23,400
Less: Drawings 1,800
Capital, December 31 21,600
Financial Accounting and Reporting 1 4
5. Example of Owners’ EquityExample of Owners’ Equity
Statement of a CompanyStatement of a Company
Note RM000 RM000
2010
2009
Share capital 10 1,050 1,020
Share premium 11 140 120
Other reserves 12 110 100
Retained earnings 13 1,610 1,540
Shareholders’ equity 2,910 2,780
Minority interest 20 10
Total 2,930 2,790
Financial Accounting and Reporting 1 5
6. Criteria of BusinessCriteria of Business
OrganizationsOrganizations
Sole Proprietor Partnership Company
Capital Small Pooled among partners Large
Ownership Individual Partners Shareholders
Legal entity No No Yes
Liability Unlimited Jointly unlimited Limited
Business tax No No Yes
Owners’ equity Simple – one owner Simple – pooled Complex
Financial Accounting and Reporting 1 6
7. Financial Accounting and Reporting 1 7
Forms of Corporate Organizations
Public Company Private Company
Share Capital Issued to public Issued to related
persons
Shareholders Unlimited Limited to 50 persons
Designation Bhd Sdn Bhd
8. Memorandum and Articles of AssociationMemorandum and Articles of Association
Memorandum and Articles of Associations are the
fundamental documents of a company.
Memorandum of Associations regulate external
affairs of a company such as company’s name, its
registered office and objectives of its
incorporation.
Articles of Associations deal with internal affairs of
a company such as issuance of shares, general
meetings and directors.
In the case of conflicting statements,
Memorandum of Associations shall prevail.
Memorandum and Articles of Associations are the
binding contract between the company and its
shareholders.
Financial Accounting and Reporting 1 8
9. Share Capital StructureShare Capital Structure
Generated from the amount of authorized share
capital that being issued and paid, valued at
nominal price. Two main forms of share capital:
o Ordinary shares
o Preference shares
Financial Accounting and Reporting 1 9
10. Ordinary Share CapitalOrdinary Share Capital
• Main component of capital structure in a
company
• Holders of ordinary shares:
o are the owners of the company.
o have the right to attend general meetings and
vote on the election of its directors and other
resolutions.
o enjoy preemptive rights upon the issuance of
new shares.
o are liability bearer in the case of liquidations.
o Are the last groups to receive dividend at no
fixed rate.
Financial Accounting and Reporting 1 10
11. Financial Accounting and Reporting 1 11
Preference Share Capital
In general, preference shareholders have
some preferential rights such as:
privilege to receive dividends.
Capital refund in the case of liquidations.
Fixed rate of dividend
But no voting rights.
Types of preference shares
Cumulative preference shares
Eligible to receive fixed annual dividends even when the
company cannot pay dividends for a particular year, by
way of accumulating that dividends to the following year.
12. Preference Share CapitalPreference Share Capital
o Non-cumulative preference shares
• Have no right to claim any unpaid dividends, in the future.
o Participating preference shares
• Have rights to receive additional dividends over and above
the specified dividend rate.
o Convertible preference shares
• Can be converted into ordinary shares after a predetermined
date.
o Callable preference shares
• Allows the issuing company to buy back the shares and retire
them.
o Redeemable preference shares
• Allows the issuing company to buy back the shares at a
specified maturity date.
Financial Accounting and Reporting 1 12
13. Authorized Share CapitalAuthorized Share Capital
• Number of units of shares registered and written in
Articles of Associations.
• It sets the limit to which the company can issue
shares.
Financial Accounting and Reporting 1 13
14. Reporting Authorized Share CapitalReporting Authorized Share Capital
Authorized share capital RM
1,000,000 ordinary shares at RM 1 1,000,000
200,000 preference shares at RM 2 400,000
1,400,000
Issued and paid-up share capital
600,000 ordinary shares at RM 1 600,000
50,000 ordinary shares at RM 2 100,000
700,000
Financial Accounting and Reporting 1 14
15. Financial Accounting and Reporting 1 15
Issued Share Capital
Company invites the public to buy shares.
Anybody who is interested to buy the shares
will express his interest by applying to the
company with full payment for the shares.
Shares will be allotted to successful
applicants, while unsuccessful applicants will
be refunded.
The total shares allotted are known as issued
share capital.
16. ExampleExample
Assume Medaniaga Bhd issues 40,00 shares
at RM 1 each during the year ended 31
December 2008. The applications are
received with full payment on October 31,
2008 for 100,000 shares. The shares are
subsequently allotted on December 31, 2008
to the successful applicants, while
unsuccessful applicants are refunded at the
same date. The entries to record the
transactions are as follows:
Financial Accounting and Reporting 1 16
17. Journal EntriesJournal Entries
Financial Accounting and Reporting 1 17
Step 1 : Upon Application
Date Details Ref Debit Credit
31/10 Cash 100,000
Share application 100,000
(record share
application)
18. Journal EntriesJournal Entries
Date Details Ref Debit Credit
31/12 Share application 40,000
Ordinary share capital 40,000
Share application 60,000
Cash 60,000
Financial Accounting and Reporting 1 18
Step 2 : Upon Allotment
19. Financial Accounting and Reporting 1 19
Issuance of Share at Par
Refers to the face value of the shares as
registered in the Articles of Associations.
If the par value is RM1 each, the subscriber of
100,000 units of shares should pay
RM100,000.
20. Journal entryJournal entry
Date Details Ref Debit Credit
Cash 100,000
Ordinary share capital 100,000
(Being ordinary share
issued at par)
Financial Accounting and Reporting 1 20
21. Financial Accounting and Reporting 1 21
Issuance of Share at Par
Authorized share capital RM
1,000,000 ordinary shares at RM 1 1,000,000
200,000 preference shares at RM 2 400,000
1,400,000
Issued and paid-up share capital
100,000 ordinary shares at RM 1 100,000
Authorized share capital RM
1,000,000 ordinary shares at RM 1 1,000,000
200,000 preference shares at RM 2 400,000
1,400,000
Issued and paid-up share capital
100,000 ordinary shares at RM 1 100,000
22. Financial Accounting and Reporting 1 22
Issuance of Share at Premium
Issue shares at the price higher than the face
value of the shares.
If the par value of a share is RM1 but the
company issues 100,000 shares at the price of
RM1.40 per share, that additional 40 cents per
share is considered as premium.
23. Journal entryJournal entry
Date Details Ref Debit Credit
Cash 140,000
Ordinary share capital
Share Premium
100,000
40,000
(Being ordinary share issued at premium)
Financial Accounting and Reporting 1 23
24. Financial Accounting and Reporting 1 24
Issuance of Share at Premium
Authorized share capital RM
1,000,000 ordinary shares at RM 1 1,000,000
200,000 preference shares at RM 2 400,000
1,400,000
Issued and paid-up share capital
100,000 ordinary shares at RM 1 100,000
Reserves
Share premium 40,000
Total share capital and reserves140,000
Authorized share capital RM
1,000,000 ordinary shares at RM 1 1,000,000
200,000 preference shares at RM 2 400,000
1,400,000
Issued and paid-up share capital
100,000 ordinary shares at RM 1 100,000
Reserves
Share premium 40,000
Total share capital and reserves140,000
25. Financial Accounting and Reporting 1 25
Issuance of Share at Discount
Issue shares at the price lower than the face
value of the shares.
If the par value of a share is RM1 but the
company issues 100,000 shares at the price of
RM0.80 per share, that 20 cents per share is
considered as discount.
26. Journal entryJournal entry
Date Details Ref Debit Credit
Cash
Share Discount
80,000
20,000
Ordinary share capital 100,000
(Being ordinary share issued at discount)
Financial Accounting and Reporting 1 26
27. Financial Accounting and Reporting 1 27
Issuance of Share at Discount
Assets RM
Share discount 20,000
Owners’ Equity
Authorized share capital
1,000,000 ordinary shares at RM 1 1,000,000
200,000 preference shares at RM 2 400,000
1,400,000
Issued and paid-up share capital
100,000 ordinary shares at RM 1 100,000
Assets RM
Share discount 20,000
Owners’ Equity
Authorized share capital
1,000,000 ordinary shares at RM 1 1,000,000
200,000 preference shares at RM 2 400,000
1,400,000
Issued and paid-up share capital
100,000 ordinary shares at RM 1 100,000
28. ReservesReserves
• Part of owners’ equity
• Comprise of capital reserve and revenue
reserve.
Financial Accounting and Reporting 1 28
29. Capital ReserveCapital Reserve
• statutory non-distributable reserve and cannot be
distributed as dividends to shareholders.
• Share premium and capital redemption reserve are
examples of capital reserves required by the
Companies Act.
• Share premium is the excess value of shares above
their nominal price.
• capital redemption reserve is required for specific
purpose, normally transferred from either the share
premium or the company’s retained earnings.
Financial Accounting and Reporting 1 29
30. Financial Accounting and Reporting 1 30
Revenue Reserve
Normally represented by the accumulated retained
earnings and can be distributed as dividends.
Examples are general reserve and dividend reserve.
Both reserves are transferred from retained earnings for
particular reason.
General reserve is meant for reducing the amount of
dividends paid out during booms and acts as financial
preparation for periods of crisis when a lot of funds are
needed.
Dividend reserve is maintained to ensure that a similar
amount of dividends can be distributed to shareholders
even during periods of low profit.
31. Shares Issued with Other Securities
Two methods of allocating proceeds:
Proportional method.
Incremental method.
LO 3 Explain the accounting procedures for issuing shares.
EquityEquityEquityEquity
32. LO 3
EquityEquityEquityEquity
Number Amount Total Percent
Ordinary shares 300 x 20.00$ = 6,000$ 40%
Preference shares 100 x 90.00 9,000 60%
Fair Market Value 15,000$ 100%
Allocation: Ordinary Preference
Issue price 13,500$ 13,500$
Allocation % 40% 60%
Total 5,400$ 8,100$
Proportional
Method
BE15-4BE15-4:: Ravonette Corporation issued 300 shares of $10 par value
ordinary shares and 100 shares of $50 par value preference shares for
a lump sum of $13,500. The ordinary shares have a market value of
$20 per share, and the preference shares have a market value of $90
per share.
33. LO 3 Explain the accounting procedures for issuing shares.
EquityEquityEquityEquity
Cash 13,500
Preference shares (100 x $50) 5,000
Journal entry (Proportional):
Share premium - preference 3,100
Ordinary shares (300 x $10) 3,000
Share premium - ordinary 2,400
BE15-4BE15-4:: Ravonette Corporation issued 300 shares of $10 par value
ordinary shares and 100 shares of $50 par value preference shares for
a lump sum of $13,500. The ordinary shares have a market value of
$20 per share, and the preference shares have a market value of $90
per share.
34. BE15-4 (Variation): Ravonette Corporation issued 300 shares of $10
par value ordinary shares and 100 shares of $50 par value preference
shares for a lump sum of $13,500. The ordinary shares have a market
value of $20 per share, and the value of preference shares are unknown.
LO 3 Explain the accounting procedures for issuing shares.
EquityEquityEquityEquity
Number Amount Total
Ordinary shares 300 x 20.00$ = 6,000$
Preference shares 100 x -
Fair Market Value 6,000$
Allocation: Ordinary Preference
Issue price 13,500$
Ordinary (6,000)
Total 6,000$ 7,500$
Incremental
Method
35. LO 3 Explain the accounting procedures for issuing shares.
EquityEquityEquityEquity
Cash 13,500
Preference shares (100 x $50) 5,000
Journal entry (Incremental):
Share premium - preference 2,500
Ordinary shares (300 x $10) 3,000
Share premium - ordinary 3,000
BE15-4 (Variation): Ravonette Corporation issued 300 shares of $10
par value ordinary shares and 100 shares of $50 par value preference
shares for a lump sum of $13,500. The ordinary shares have a market
value of $20 per share, and the value of preference shares are unknown.
36. Shares Issued in Noncash Transactions
The general rule: Companies should record shares
issued for services or property other than cash at the
fair value of the goods or services received.
If the fair value of the goods or services cannot be
measured reliably, use the fair value of the shares
issued.
LO 3 Explain the accounting procedures for issuing shares.
EquityEquityEquityEquity
37. LO 3 Explain the accounting procedures for issuing shares.
EquityEquityEquityEquity
Illustration: The following series of transactions illustrates the
procedure for recording the issuance of 10,000 shares of $10
par value ordinary shares for a patent for Marlowe Company,
in various circumstances.
1. Marlowe cannot readily determine the fair value of the
patent, but it knows the fair value of the shares is $140,000.
Patent 140,000
Share Capital—Ordinary 100,000
Share Premium—Ordinary 40,000
38. LO 3 Explain the accounting procedures for issuing shares.
EquityEquityEquityEquity
2. Marlowe cannot readily determine the fair value of the
shares, but it determines the fair value of the patent is
$150,000.
Patent 150,000
Share Capital—Ordinary 100,000
Share Premium—Ordinary 50,000
39. Financial Accounting and Reporting 1 39
Disclosure of Owners’ Equity
The Companies Act 1965 requires the following disclosure of
owners’ equity:
the amount of authorized capital
the particulars of issued capital
redeemable preferences shares
any share capital on which interest has been paid out of capital during
the financial year and the rate at which interest has been so paid
separate disclosure of the following reserves:
i. share premium account
ii. revaluation surplus
iii. balance of profit and loss account
iv. other reserves
40. Financial Accounting and Reporting 1 40
Disclosure of Owners’ Equity
According to MFRS 101 paragraph 76, Presentation of Financial
Statements, an enterprise should disclose the following, either on
the face of the balance sheet or in the notes:
For each class of share capital:
- the number of authorized shares
- the number of shares issued and fully paid, and issued but not fully paid
- par value per share, or that the shares have no par value
- a reconciliation of the number of shares outstanding at the beginning and at
the end of the year
- the rights, preferences, and restrictions attaching to that class including
restrictions on the distribution of dividends and the repayment of capital
- shares in the enterprise held by the enterprise itself or by subsidiaries or
associates of the enterprise
- shares reserved for issuance under options and sales contracts, including the
terms and amounts.
41. Financial Accounting and Reporting 1 41
Disclosure of Owners’ Equity
A description of the nature and purpose of each reserve within
owner’s equity.
When dividends have been proposed but not formally approved
for payment, the amount included (or not included) in liabilities.
The amount of any cumulative preference dividends not
recognized.
An enterprise without share capital, such as partnership, should disclose
information equivalent to that required above, showing movements during the
period in each category of equity interest and rights, preferences, and restrictions
attaching to each category of equity interest. The standard further emphasizes
that equity capital and reserves are analyzed showing separately the various
classes of paid-up capital, share premium, and reserves.
42. ConclusionConclusion
• Owners’ equity represents the ownership
of a company.
• Owners’ equity of a company normally
arises from the investment of shareholders
and retained earnings.
• It is mandatory for a company to report
owners’ equity on the balance sheet as
highlighted in FRS 101, Presentations of
Financial Statements.
Financial Accounting and Reporting 1 42