Accounting for Common Share Issues

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Department
Financial Accounting
Course
MGAB01H3
Professor
Liang Chen
Semester
Fall

Description
Accounting for Common Share Issues The primary objectives in accounting for the issue of common shares are to identify the specific sources of contributed capital and maintain the distinction between contributed capital and retained earnings. The issue of common shares affects only contributed capital accounts. Issuing No Par Value Shares for Cash: shares are most commonly issued in exchange for cash. When no par value common shares are issued, the entire proceeds from the issue become legal capital. Issuing Stated Value Shares for Cash: stated value does not indL.,90,8K,7082,7N09;,O:0 The cash proceeds from issuing stated value shares may be equal to or greater than stated value. The proceeds cannot be less than stated value, since it is prohibited to issue shares at less than stated value. When the issue of common shares for cash is recorded, the stated value of the shares is credited to the Common Shares account. The portion that is above stated value is recorded in a separate contributed capital account. Issuing Par Value Shares for Cash: The entries for par value shares are similar to those for stated value shares. The par value represents legal capital, and the number of shares issued multiplied by the par value is credited to the Common Shares account; excess is credited to the Contributed Capital in Excess of Par Value account. Issuing Shares for Services or Noncash Assets: shares
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