far m13- stockholder's equity

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1、M13—Stockholder’sEquityStudyNotes-FARM13(Stockholder’sEquity)TypesofCommonStockTherearedifferenttypesofcommonstockbasedonwhetherornottheyhaveaparvalue.Parvalueisessentiallythestatedvalueofthestockthatisprintedontheshareitself.However,theparvaluedoesnotimpacttheselling

2、priceofthestock.Theparvalueisassignedtotheshareswhentheyareregisteredanddoesnotneedtobeanyspecificamount.Infact,parvalueisusuallyasmallamountbecauseofwhatitrepresents.Whenthesharesaresold,theparvalueoftheshareswillbeputintotheCommonStockaccount.Therearetwotypesofshare

3、sbasedontheexistenceofaparvalue:1.Par(orStated)ValueParvalueisthespecifiedvalueprintedontheshareitself.Parvalueisthemaximumamountofashareholder¡¯sliabilitytothecreditorsofthecompany.Theparvalueofallsharesissuedandsubscribedrepresentsthelegalorstatedcapitalofacompany.L

4、egalcapitalistheportionofcontributedcapitalthatisrequiredbystatutetoberetainedinabusiness.Thiscapitalcannotbedistributedasdividends.Becauseofthisrestrictionondistribution,companiesmaychoosetohaveaverylowparvalue.2.No-ParValueForstockthatdoesnothaveaparvalue,thelegalca

5、pitalisthetotalamountthatisreceivedwhenthesharesareissuedandthewholeamountreceivediscreditedtothecommonstockaccount.StockSubscriptionsPage522onWiley’sbookhasallthedetails.TypesofPreferredStocksTherearemanydifferenttypesofpreferredstock,butthreeofthemostcommonthatyoush

6、ouldbefamiliarwithare:1)RedeemablePreferredShares:Thesepreferredsharesmaybesoldbacktothecompanyataspecifiedpriceattheoptionoftheshareholder2)ConvertiblePreferredShares:Thesesharesmaybeconvertedintocommonsharesattheoptionoftheshareholder.Iftheyareconverted,thenewlyissu

7、edcommonsharesarerecordedatthebookvalueofthepreferredsharesthatwereconverted.Thereisnogainorlossrecordedonthistransactionasthenewlyissuedcommonsharesreplacethepreferredsharesonthebooks.3)CallablePreferredShares:Thesesharescanbecalled(orretired)attheoptionofthecorporat

8、ion7M13—Stockholder’sEquityTreasuryStocksExample:Theoriginalissuanceisof1,000sharesthathavea$10parvalue.Theissuepriceis$15pe