AFM123 Chapter Notes - Chapter 11: Retained Earnings, Authorised Capital, Issued Shares

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM123
• Professor: Peter Blake

Document Summary

Shareholders" equity components: common shares, preferred shares, contributed surplus, retained. Private public means trade in public markets (more than 50 shareholders); private means held by. <50 owners and do not trade on a recognized stock exchange. Preferred shares: carry dividend entitlement if declared; rank ahead of common shares in a liquidation. Order of payout in a liquidation: depends on jurisdiction but generally secured creditors first, then unsecured creditors, preferred shareholders, common shareholders. Assume issued 5,000,000 shares for ,000 (entry would be the same if issued 25 shares). Buying assets for shares: use fmv of consideration given up if reliable (i. e. public market value if shares are public, but if the shares are private, no reliable market for shares so must use fmv of assets acquired). Example acquire assets worth ,000 for 50,000 shares of a private corporation. Dividends 3 dates: declaration date (liability to pay is created by board resolution), date of record (no entry);