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AU / Accounting / ACCT 3110 / How does one compute for stockholders' equity?

How does one compute for stockholders' equity?

How does one compute for stockholders' equity?

Description

School: Auburn University
Department: Accounting
Course: Intermediate Accounting I
Professor: Duane brandon
Term: Spring 2017
Tags: Accounting and Intermediate
Cost: 50
Name: Test 2 Notes
Description: These notes cover chapters 4 and 5 for our second test. The notes are from the powerpoint slides, lecture and textbook. Also included are worked out problems from class.
Uploaded: 02/19/2017
21 Pages 36 Views 4 Unlocks
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ol.lst-kix_8zfbkqlt4zi2-8.start{counter-reset:lst-ctn-kix_8zfbkqlt4zi2-8 0}.lst-kix_8zfbkqlt4zi2-4 > li{counter-increment:lst-ctn-kix_8zfbkqlt4zi2-4}.lst-kix_exo1rumvc78-8 > li:before{content:"▪ "}.lst-kix_rfnqurhi5qld-1 > li{counter-increment:lst-ctn-kix_rfnqurhi5qld-1}.lst-kix_exo1rumvc78-2 > li:before{content:"▪ "}ol.lst-kix_iinen4n37usl-6.start{counter-reset:lst-ctn-kix_iinen4n37usl-6 0}.lst-kix_exo1rumvc78-3 > li:before{content:"● "}.lst-kix_exo1rumvc78-4 > li:before{content:"o "}.lst-kix_exo1rumvc78-5 > li:before{content:"▪ "}.lst-kix_exo1rumvc78-7 > li:before{content:"o "}.lst-kix_exo1rumvc78-6 > li:before{content:"● "}ol.lst-kix_mvw6g4dfka1z-0{list-style-type:none}.lst-kix_iinen4n37usl-5 > li{counter-increment:lst-ctn-kix_iinen4n37usl-5}ol.lst-kix_mvw6g4dfka1z-5.start{counter-reset:lst-ctn-kix_mvw6g4dfka1z-5 0}ol.lst-kix_mvw6g4dfka1z-6{list-style-type:none}ol.lst-kix_rfnqurhi5qld-2.start{counter-reset:lst-ctn-kix_rfnqurhi5qld-2 0}ol.lst-kix_mvw6g4dfka1z-5{list-style-type:none}ol.lst-kix_mvw6g4dfka1z-8{list-style-type:none}ol.lst-kix_mvw6g4dfka1z-7{list-style-type:none}ol.lst-kix_mvw6g4dfka1z-2{list-style-type:none}ol.lst-kix_mvw6g4dfka1z-1{list-style-type:none}ol.lst-kix_mvw6g4dfka1z-4{list-style-type:none}ol.lst-kix_mvw6g4dfka1z-3{list-style-type:none}ol.lst-kix_iinen4n37usl-6{list-style-type:none}.lst-kix_iinen4n37usl-1 > li{counter-increment:lst-ctn-kix_iinen4n37usl-1}ol.lst-kix_iinen4n37usl-7{list-style-type:none}ul.lst-kix_z1x3wfnur077-0{list-style-type:none}.lst-kix_iinen4n37usl-7 > li{counter-increment:lst-ctn-kix_iinen4n37usl-7}ol.lst-kix_iinen4n37usl-8{list-style-type:none}ul.lst-kix_z1x3wfnur077-1{list-style-type:none}ul.lst-kix_z1x3wfnur077-2{list-style-type:none}.lst-kix_rfnqurhi5qld-0 > li:before{content:"" counter(lst-ctn-kix_rfnqurhi5qld-0,decimal) ". "}ul.lst-kix_z1x3wfnur077-7{list-style-type:none}ul.lst-kix_z1x3wfnur077-8{list-style-type:none}ol.lst-kix_iinen4n37usl-0{list-style-type:none}ol.lst-kix_iinen4n37usl-1{list-style-type:none}ol.lst-kix_iinen4n37usl-2{list-style-type:none}ul.lst-kix_z1x3wfnur077-3{list-style-type:none}ol.lst-kix_iinen4n37usl-3{list-style-type:none}ul.lst-kix_z1x3wfnur077-4{list-style-type:none}ol.lst-kix_iinen4n37usl-4{list-style-type:none}ul.lst-kix_z1x3wfnur077-5{list-style-type:none}ol.lst-kix_iinen4n37usl-5{list-style-type:none}ul.lst-kix_z1x3wfnur077-6{list-style-type:none}.lst-kix_8zfbkqlt4zi2-2 > li{counter-increment:lst-ctn-kix_8zfbkqlt4zi2-2}.lst-kix_rfnqurhi5qld-7 > li:before{content:"" counter(lst-ctn-kix_rfnqurhi5qld-7,lower-latin) ". "}.lst-kix_rfnqurhi5qld-8 > li:before{content:"" counter(lst-ctn-kix_rfnqurhi5qld-8,lower-roman) ". "}ul.lst-kix_105yqaocvsby-5{list-style-type:none}ul.lst-kix_105yqaocvsby-4{list-style-type:none}ol.lst-kix_8zfbkqlt4zi2-3.start{counter-reset:lst-ctn-kix_8zfbkqlt4zi2-3 0}ul.lst-kix_105yqaocvsby-3{list-style-type:none}ul.lst-kix_105yqaocvsby-2{list-style-type:none}ul.lst-kix_105yqaocvsby-1{list-style-type:none}ul.lst-kix_105yqaocvsby-0{list-style-type:none}.lst-kix_8zfbkqlt4zi2-8 > li{counter-increment:lst-ctn-kix_8zfbkqlt4zi2-8}ol.lst-kix_mvw6g4dfka1z-6.start{counter-reset:lst-ctn-kix_mvw6g4dfka1z-6 0}.lst-kix_rfnqurhi5qld-3 > li{counter-increment:lst-ctn-kix_rfnqurhi5qld-3}ul.lst-kix_105yqaocvsby-8{list-style-type:none}ul.lst-kix_105yqaocvsby-7{list-style-type:none}ol.lst-kix_8zfbkqlt4zi2-2.start{counter-reset:lst-ctn-kix_8zfbkqlt4zi2-2 0}ul.lst-kix_105yqaocvsby-6{list-style-type:none}.lst-kix_rfnqurhi5qld-6 > li:before{content:"" counter(lst-ctn-kix_rfnqurhi5qld-6,decimal) ". "}.lst-kix_rfnqurhi5qld-5 > li:before{content:"" counter(lst-ctn-kix_rfnqurhi5qld-5,lower-roman) ". "}ol.lst-kix_mvw6g4dfka1z-0.start{counter-reset:lst-ctn-kix_mvw6g4dfka1z-0 0}.lst-kix_mvw6g4dfka1z-0 > li{counter-increment:lst-ctn-kix_mvw6g4dfka1z-0}.lst-kix_rfnqurhi5qld-4 > li:before{content:"" counter(lst-ctn-kix_rfnqurhi5qld-4,lower-latin) ". "}.lst-kix_rfnqurhi5qld-1 > li:before{content:"" counter(lst-ctn-kix_rfnqurhi5qld-1,lower-latin) ". "}.lst-kix_rfnqurhi5qld-3 > li:before{content:"" counter(lst-ctn-kix_rfnqurhi5qld-3,decimal) ". "}.lst-kix_rfnqurhi5qld-2 > li:before{content:"" counter(lst-ctn-kix_rfnqurhi5qld-2,lower-roman) ". "}.lst-kix_mvw6g4dfka1z-5 > li{counter-increment:lst-ctn-kix_mvw6g4dfka1z-5}ol.lst-kix_8zfbkqlt4zi2-1.start{counter-reset:lst-ctn-kix_8zfbkqlt4zi2-1 0}.lst-kix_z1x3wfnur077-8 > li:before{content:"▪ "}.lst-kix_dcqcqm3vzvsa-0 > li:before{content:"● "}.lst-kix_dcqcqm3vzvsa-2 > li:before{content:"■ "}.lst-kix_z1x3wfnur077-6 > li:before{content:"● "}.lst-kix_z1x3wfnur077-4 > li:before{content:"o "}.lst-kix_dcqcqm3vzvsa-8 > li:before{content:"■ "}ol.lst-kix_rfnqurhi5qld-6.start{counter-reset:lst-ctn-kix_rfnqurhi5qld-6 0}.lst-kix_mvw6g4dfka1z-3 > li:before{content:"" counter(lst-ctn-kix_mvw6g4dfka1z-3,decimal) ". "}ol.lst-kix_iinen4n37usl-8.start{counter-reset:lst-ctn-kix_iinen4n37usl-8 0}.lst-kix_dcqcqm3vzvsa-4 > li:before{content:"○ "}.lst-kix_mvw6g4dfka1z-1 > li:before{content:"" counter(lst-ctn-kix_mvw6g4dfka1z-1,lower-latin) ". "}ol.lst-kix_8zfbkqlt4zi2-0{list-style-type:none}ol.lst-kix_8zfbkqlt4zi2-1{list-style-type:none}ol.lst-kix_8zfbkqlt4zi2-2{list-style-type:none}ol.lst-kix_8zfbkqlt4zi2-3{list-style-type:none}.lst-kix_mvw6g4dfka1z-4 > li{counter-increment:lst-ctn-kix_mvw6g4dfka1z-4}.lst-kix_mvw6g4dfka1z-7 > li:before{content:"" counter(lst-ctn-kix_mvw6g4dfka1z-7,lower-latin) ". "}ol.lst-kix_8zfbkqlt4zi2-8{list-style-type:none}.lst-kix_dcqcqm3vzvsa-6 > li:before{content:"● "}ol.lst-kix_8zfbkqlt4zi2-4{list-style-type:none}ol.lst-kix_8zfbkqlt4zi2-5{list-style-type:none}ol.lst-kix_iinen4n37usl-5.start{counter-reset:lst-ctn-kix_iinen4n37usl-5 0}.lst-kix_rfnqurhi5qld-5 > li{counter-increment:lst-ctn-kix_rfnqurhi5qld-5}ol.lst-kix_8zfbkqlt4zi2-6{list-style-type:none}.lst-kix_mvw6g4dfka1z-5 > li:before{content:"" counter(lst-ctn-kix_mvw6g4dfka1z-5,lower-roman) ". "}ol.lst-kix_8zfbkqlt4zi2-7{list-style-type:none}.lst-kix_rfnqurhi5qld-4 > li{counter-increment:lst-ctn-kix_rfnqurhi5qld-4}ol.lst-kix_iinen4n37usl-7.start{counter-reset:lst-ctn-kix_iinen4n37usl-7 0}.lst-kix_8zfbkqlt4zi2-5 > li:before{content:"" counter(lst-ctn-kix_8zfbkqlt4zi2-5,lower-roman) ". "}.lst-kix_105yqaocvsby-6 > li:before{content:"● "}.lst-kix_105yqaocvsby-8 > li:before{content:"▪ "}.lst-kix_8zfbkqlt4zi2-3 > li:before{content:"" counter(lst-ctn-kix_8zfbkqlt4zi2-3,decimal) ". "}ol.lst-kix_rfnqurhi5qld-8.start{counter-reset:lst-ctn-kix_rfnqurhi5qld-8 0}.lst-kix_8zfbkqlt4zi2-1 > li:before{content:"" counter(lst-ctn-kix_8zfbkqlt4zi2-1,lower-latin) ". "}.lst-kix_105yqaocvsby-0 > li:before{content:"- "}ul.lst-kix_dcqcqm3vzvsa-5{list-style-type:none}ul.lst-kix_dcqcqm3vzvsa-6{list-style-type:none}.lst-kix_iinen4n37usl-0 > li{counter-increment:lst-ctn-kix_iinen4n37usl-0}ul.lst-kix_dcqcqm3vzvsa-3{list-style-type:none}ul.lst-kix_dcqcqm3vzvsa-4{list-style-type:none}ul.lst-kix_dcqcqm3vzvsa-1{list-style-type:none}ul.lst-kix_exo1rumvc78-6{list-style-type:none}ul.lst-kix_dcqcqm3vzvsa-2{list-style-type:none}ul.lst-kix_exo1rumvc78-7{list-style-type:none}ul.lst-kix_exo1rumvc78-8{list-style-type:none}ul.lst-kix_dcqcqm3vzvsa-0{list-style-type:none}ul.lst-kix_exo1rumvc78-2{list-style-type:none}ul.lst-kix_exo1rumvc78-3{list-style-type:none}ul.lst-kix_exo1rumvc78-4{list-style-type:none}ul.lst-kix_exo1rumvc78-5{list-style-type:none}.lst-kix_105yqaocvsby-4 > li:before{content:"o "}ul.lst-kix_exo1rumvc78-0{list-style-type:none}.lst-kix_8zfbkqlt4zi2-7 > li:before{content:"" counter(lst-ctn-kix_8zfbkqlt4zi2-7,lower-latin) ". "}.lst-kix_exo1rumvc78-0 > li:before{content:"• "}ul.lst-kix_exo1rumvc78-1{list-style-type:none}.lst-kix_105yqaocvsby-2 > li:before{content:"▪ "}.lst-kix_8zfbkqlt4zi2-6 > li{counter-increment:lst-ctn-kix_8zfbkqlt4zi2-6}.lst-kix_8zfbkqlt4zi2-0 > li{counter-increment:lst-ctn-kix_8zfbkqlt4zi2-0}.lst-kix_iinen4n37usl-6 > li{counter-increment:lst-ctn-kix_iinen4n37usl-6}ol.lst-kix_rfnqurhi5qld-7.start{counter-reset:lst-ctn-kix_rfnqurhi5qld-7 0}.lst-kix_iinen4n37usl-4 > li{counter-increment:lst-ctn-kix_iinen4n37usl-4}.lst-kix_iinen4n37usl-2 > li:before{content:"" counter(lst-ctn-kix_iinen4n37usl-2,lower-roman) ". "}.lst-kix_iinen4n37usl-4 > li:before{content:"" counter(lst-ctn-kix_iinen4n37usl-4,lower-latin) ". "}.lst-kix_iinen4n37usl-3 > li:before{content:"" counter(lst-ctn-kix_iinen4n37usl-3,decimal) ". "}.lst-kix_iinen4n37usl-7 > li:before{content:"" counter(lst-ctn-kix_iinen4n37usl-7,lower-latin) ". "}.lst-kix_iinen4n37usl-0 > li:before{content:"" counter(lst-ctn-kix_iinen4n37usl-0,decimal) ". "}.lst-kix_iinen4n37usl-8 > li:before{content:"" counter(lst-ctn-kix_iinen4n37usl-8,lower-roman) ". "}.lst-kix_iinen4n37usl-1 > li:before{content:"" counter(lst-ctn-kix_iinen4n37usl-1,lower-latin) ". "}ol.lst-kix_8zfbkqlt4zi2-5.start{counter-reset:lst-ctn-kix_8zfbkqlt4zi2-5 0}.lst-kix_8zfbkqlt4zi2-5 > li{counter-increment:lst-ctn-kix_8zfbkqlt4zi2-5}ul.lst-kix_dcqcqm3vzvsa-7{list-style-type:none}ul.lst-kix_dcqcqm3vzvsa-8{list-style-type:none}.lst-kix_iinen4n37usl-6 > li:before{content:"" counter(lst-ctn-kix_iinen4n37usl-6,decimal) ". "}.lst-kix_iinen4n37usl-5 > li:before{content:"" counter(lst-ctn-kix_iinen4n37usl-5,lower-roman) ". "}ol.lst-kix_rfnqurhi5qld-7{list-style-type:none}ol.lst-kix_rfnqurhi5qld-6{list-style-type:none}ol.lst-kix_rfnqurhi5qld-8{list-style-type:none}ul.lst-kix_ml5rx9els7b3-8{list-style-type:none}ol.lst-kix_rfnqurhi5qld-3{list-style-type:none}ol.lst-kix_8zfbkqlt4zi2-0.start{counter-reset:lst-ctn-kix_8zfbkqlt4zi2-0 0}.lst-kix_mvw6g4dfka1z-1 > li{counter-increment:lst-ctn-kix_mvw6g4dfka1z-1}ol.lst-kix_rfnqurhi5qld-2{list-style-type:none}ol.lst-kix_mvw6g4dfka1z-8.start{counter-reset:lst-ctn-kix_mvw6g4dfka1z-8 0}ol.lst-kix_rfnqurhi5qld-5{list-style-type:none}ol.lst-kix_rfnqurhi5qld-4{list-style-type:none}.lst-kix_iinen4n37usl-2 > li{counter-increment:lst-ctn-kix_iinen4n37usl-2}ol.lst-kix_rfnqurhi5qld-1{list-style-type:none}ol.lst-kix_rfnqurhi5qld-0{list-style-type:none}ol.lst-kix_mvw6g4dfka1z-2.start{counter-reset:lst-ctn-kix_mvw6g4dfka1z-2 0}.lst-kix_rfnqurhi5qld-2 > li{counter-increment:lst-ctn-kix_rfnqurhi5qld-2}.lst-kix_8zfbkqlt4zi2-7 > li{counter-increment:lst-ctn-kix_8zfbkqlt4zi2-7}.lst-kix_8zfbkqlt4zi2-1 > li{counter-increment:lst-ctn-kix_8zfbkqlt4zi2-1}ol.lst-kix_rfnqurhi5qld-5.start{counter-reset:lst-ctn-kix_rfnqurhi5qld-5 0}.lst-kix_ml5rx9els7b3-0 > li:before{content:"→ "}.lst-kix_ml5rx9els7b3-1 > li:before{content:"o "}ul.lst-kix_ml5rx9els7b3-7{list-style-type:none}ul.lst-kix_ml5rx9els7b3-6{list-style-type:none}ul.lst-kix_ml5rx9els7b3-5{list-style-type:none}ol.lst-kix_iinen4n37usl-4.start{counter-reset:lst-ctn-kix_iinen4n37usl-4 0}ul.lst-kix_ml5rx9els7b3-4{list-style-type:none}ul.lst-kix_ml5rx9els7b3-3{list-style-type:none}.lst-kix_rfnqurhi5qld-0 > li{counter-increment:lst-ctn-kix_rfnqurhi5qld-0}ul.lst-kix_ml5rx9els7b3-2{list-style-type:none}ul.lst-kix_ml5rx9els7b3-1{list-style-type:none}ul.lst-kix_ml5rx9els7b3-0{list-style-type:none}.lst-kix_rfnqurhi5qld-6 > li{counter-increment:lst-ctn-kix_rfnqurhi5qld-6}.lst-kix_ml5rx9els7b3-6 > li:before{content:"● "}.lst-kix_ml5rx9els7b3-7 > li:before{content:"o "}ol.lst-kix_iinen4n37usl-3.start{counter-reset:lst-ctn-kix_iinen4n37usl-3 0}.lst-kix_ml5rx9els7b3-4 > li:before{content:"o "}.lst-kix_ml5rx9els7b3-5 > li:before{content:"▪ "}.lst-kix_ml5rx9els7b3-8 > li:before{content:"▪ "}.lst-kix_z1x3wfnur077-2 > li:before{content:"▪ "}.lst-kix_ml5rx9els7b3-2 > li:before{content:"▪ "}.lst-kix_ml5rx9els7b3-3 > li:before{content:"● "}.lst-kix_z1x3wfnur077-1 > li:before{content:"o "}.lst-kix_mvw6g4dfka1z-6 > li{counter-increment:lst-ctn-kix_mvw6g4dfka1z-6}.lst-kix_z1x3wfnur077-0 > li:before{content:"⮚ "}.lst-kix_mvw6g4dfka1z-3 > li{counter-increment:lst-ctn-kix_mvw6g4dfka1z-3}ol.lst-kix_mvw6g4dfka1z-7.start{counter-reset:lst-ctn-kix_mvw6g4dfka1z-7 0}ol.lst-kix_rfnqurhi5qld-4.start{counter-reset:lst-ctn-kix_rfnqurhi5qld-4 0}ol.lst-kix_rfnqurhi5qld-0.start{counter-reset:lst-ctn-kix_rfnqurhi5qld-0 0}ol.lst-kix_iinen4n37usl-2.start{counter-reset:lst-ctn-kix_iinen4n37usl-2 0}ol.lst-kix_mvw6g4dfka1z-4.start{counter-reset:lst-ctn-kix_mvw6g4dfka1z-4 0}.lst-kix_dcqcqm3vzvsa-1 > li:before{content:"○ "}ol.lst-kix_mvw6g4dfka1z-1.start{counter-reset:lst-ctn-kix_mvw6g4dfka1z-1 0}.lst-kix_z1x3wfnur077-5 > li:before{content:"▪ "}.lst-kix_z1x3wfnur077-7 > li:before{content:"o "}.lst-kix_rfnqurhi5qld-7 > li{counter-increment:lst-ctn-kix_rfnqurhi5qld-7}.lst-kix_z1x3wfnur077-3 > li:before{content:"● "}ol.lst-kix_rfnqurhi5qld-3.start{counter-reset:lst-ctn-kix_rfnqurhi5qld-3 0}.lst-kix_mvw6g4dfka1z-0 > li:before{content:"" counter(lst-ctn-kix_mvw6g4dfka1z-0,decimal) ". "}ol.lst-kix_8zfbkqlt4zi2-7.start{counter-reset:lst-ctn-kix_8zfbkqlt4zi2-7 0}.lst-kix_mvw6g4dfka1z-2 > li:before{content:"" counter(lst-ctn-kix_mvw6g4dfka1z-2,lower-roman) ". "}.lst-kix_dcqcqm3vzvsa-5 > li:before{content:"■ "}.lst-kix_iinen4n37usl-8 > li{counter-increment:lst-ctn-kix_iinen4n37usl-8}.lst-kix_dcqcqm3vzvsa-3 > li:before{content:"● "}.lst-kix_mvw6g4dfka1z-8 > li:before{content:"" counter(lst-ctn-kix_mvw6g4dfka1z-8,lower-roman) ". "}ol.lst-kix_8zfbkqlt4zi2-4.start{counter-reset:lst-ctn-kix_8zfbkqlt4zi2-4 0}.lst-kix_mvw6g4dfka1z-6 > li:before{content:"" counter(lst-ctn-kix_mvw6g4dfka1z-6,decimal) ". "}.lst-kix_mvw6g4dfka1z-4 > li:before{content:"" counter(lst-ctn-kix_mvw6g4dfka1z-4,lower-latin) ". "}.lst-kix_mvw6g4dfka1z-7 > li{counter-increment:lst-ctn-kix_mvw6g4dfka1z-7}.lst-kix_rfnqurhi5qld-8 > li{counter-increment:lst-ctn-kix_rfnqurhi5qld-8}.lst-kix_dcqcqm3vzvsa-7 > li:before{content:"○ "}.lst-kix_mvw6g4dfka1z-8 > li{counter-increment:lst-ctn-kix_mvw6g4dfka1z-8}ol.lst-kix_8zfbkqlt4zi2-6.start{counter-reset:lst-ctn-kix_8zfbkqlt4zi2-6 0}.lst-kix_105yqaocvsby-7 > li:before{content:"o "}.lst-kix_8zfbkqlt4zi2-4 > li:before{content:"" counter(lst-ctn-kix_8zfbkqlt4zi2-4,lower-latin) ". "}ol.lst-kix_iinen4n37usl-1.start{counter-reset:lst-ctn-kix_iinen4n37usl-1 0}.lst-kix_8zfbkqlt4zi2-0 > li:before{content:"" counter(lst-ctn-kix_8zfbkqlt4zi2-0,decimal) ". "}.lst-kix_8zfbkqlt4zi2-2 > li:before{content:"" counter(lst-ctn-kix_8zfbkqlt4zi2-2,lower-roman) ". 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Chapter 4If you want to learn more check out Is an executive order a law?

Balance Sheet – financial position at a particular date

  •  Does not show the total fair raise of a company
  • Useful to external users who estimate fair value

Recognizing items on BS

  • Definition of an element: assets, liabilities, stockholder’s equity
  • Measurable
  • Relevant
  • Faithfully represented

If you want to learn more check out What is the foundation of the universe?

Assets: future economic benefits, obtained/ controlled by a company, result of past transaction/ (service potential – potential benefit from the asset)We also discuss several other topics like What is parasocial interaction?

Liabilities: future sacrifice of economic benefit, arise from present obligations, result past transactions or events

Stockholders Equity Net Assets: Assets – Liabilities, residual interest in the assets of a company that remain after deducting liabilitiesDon't forget about the age old question of When did bayeux tapestry emerge as a form of art?

Mixed attribute model – elements measured based on different measurement

  • Historical cost, or current historical cost + allocated (depreciation)
  • Common current values, fair value exit value (to sell asset), present value, replacement costs, net realizable value (what do we expect to receive)

We also discuss several other topics like What is the definition of installment accounts receivable?

Valuation of Balance Sheet Elements

Fair Value – said to be most relevant but not always faithfully represented We also discuss several other topics like Is confabulation the same as mere-familiarity effect?

Hierarchy of valuation of methods:

  1. Quoted price for identical asset/ liability

(has stocks, what is it worth at the end of the year, look at trading price)

  1. Adjusted price (exit value) for similar asset/ liability

(bond that is no longer traded, find something close)

  1. Estimate and assumptions

(what are the future cash flows, depreciation, based on some model)

Actual Balance Sheet – Current assets (within a year)(normally)

Decreasing liquidity ↓ cash/ cash equivalents

                           ST investments (actively traded                        unrestricted

                           A/R (ST)                                                no reason we

(Valued at lower of      Inventors (broken up)                                continue use it now

cost method)                    Prepaids (S-T) (historical cost)

        

Long term Investments + Funds

  1. L-T available for sale securities (lower market value)
  2. Bonds we have purchased from other companies (hold until mature, net present value)
  3. Cash surrender value of life insurance policy
  4. Restricted cash – sinking funds (attained to bonds saving for paying back bonds), stock redemption funds, plan expansion
  5. Noncurrent bonds: N/R or long term advancement
  6. Land/ equipment for future use (valued at cost, unpaired – lower market value)
  • Not in PPE because not being currently used

PPE

  1. Property – land (at cost) (unless impaired) no depreciation
  2. Plant + Equipment – (cost – applicable depreciation)
  3. Natural resources – (cost – applicable depletion (use of resources))

Intangibles (can’t touch)

  1. Finite – life intangibles: patents, software, franchise, licenses
  2. Indefinite-life intangibles: trademark, brand names, cost
  3. (Purchased) Goodwill -  valued at cost, purchased another company for more than that company is worth fair market value

Other (doesn’t fit)

Long term prepayments (only after a year part), deferred tax assets, bond issue costs, idle fixed asset (land, no longer in use, no intent to sell) customer security deposits (worried about customers payability)

Liabilities

Current liabilities – provide for within next year

        S-T payables – cash + accrued interest

        Deferred revenue – unearned

        S-T Portion of L-T Debt – (five mortgage portion)

Long term liability (decrease maturity date, restrictions, 5 year cash flow req)

        N – Payable

        Bond payable

Other

        Deferred tax liability

Stockholders Equity

  • Contributed capital – stock paid in capital amount
  • Common stock
  • Add. Paid in Capital
  • Preferred stock

Retained Earnings (deficit-negative RE)

Accumulated other comprehensive income – net income + other comp. income

        (other comp income – unrealized gains/ losses for sale securities, foreign currency translations)

Treasury stock – holding our own company stock (contra-equity, reduces stockholder’s equity)

Non-controlling interests – result of us consolidating another company

                                (don’t own 100% but own more than 50%)

  • Lots of footnotes for the balance sheet (disclose depreciation methods, inventory cost methods)
  • 1st footnote summary of significant accounting policies

  • Fair value/ Risk of Financial instrument – bonds, disclose them at market value, and derivative not

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