Assignment
1. When a company lists its common stock as having a stated par value, then any amount that the stock sells for above the par value is "additional paid-in capital in excess of par." However, if there is no stated par value, such as "no par" or "stated value of zero par," then do you still need to have the account of "additional paid-in capital in excess of par"? If not, then how do you account for this item, or do you?
2. When we issue stock (Common or preferred), we could have par or no par stock. How do we do it? Also, When we have a transaction with owners (in any type of transaction, whether it be issuing stock, buying it back, dividends paid, liquidating dividends, stock splits, ect.. Do we have a gain or loss, or neither? Why?
3. There are two methods for Treasury stock. First, what is treasury stock? What are the two methods?
4. Does anyone have an idea (no looking), but what we mean by piecing the corporate veil?
Case: Conceptual Issues-Equity
Statements of Financial Accounting Concepts set forth financial accounting and reporting objectives and fundamentals that will be used by the Financial Accounting Standards Board in developing standards. Concepts Statement No. 6 defines various elements of financial statements.
Instructions
Answer the following questions based on S1AC No. 6.
(a) Define and discuss the term "equity"
(b) What transactions or events change owners' equity?
(c) Define "investments by owners" and provide examples of this type of transaction. What financial statement element other than equity is typically affected by owner investments?
(d) Define "distributions to owners" and provide examples of this type of transaction. What financial statement element other than equity is typically affected by distributions?
(e) What are examples of changes within owners' equity that do not change the total amount of owners' equity?