18 - 8
• Total equity. • Often presented before liabilities.
The Corporate Organization
Advantages of a corporation
Continuous Existence
Easy ownership transfer
Articles of incorporation are filed with the state. State issues a corporate charter. Shares of stock issued.
18 - 12
Board of directors appoint officers. Board of directors elected by shareholders.
Limited liability company
• No limit on number of owners.
Limited liability partnership
•
Owners are liable for their own actions but not entirely liable for actions of other partners.
Shareholders’ Equity
Paid-in Capital
Retained Earnings Accumulated Other Comprehensive Income
18 - 2
Financial Reporting Overview
Shareholders' Equity Paid-in-capital: Captial stock: Preferred stock - $100 par value; 1,000 shares authorized; 400 shares issued and outstanding $ 40,000 Common stock - $10 par value; 60,000 shares authorized; 20,000 shares issued and outstanding 200,000 Additional paid-in capital in excess of par value From issuance of preferred stock 10,000 From issuance of common stock 300,000 Total paid-in capital $ 550,000 Retained earnings 121,500 Accumulated other comprehensive income: Net unrealized holding gains (losses) on investments (35,000) Gains (losses) from foreign currency translation 22,000 (13,000) Treasury stock (at cost) (10,000) Total shareholders' equity $ 648,500
