Notes for academic purposes, Summaries of Financial Accounting

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ACCOUNTING FOR CORPORATIONS 6 Share Capital Learning Objectives: After studying this chapter, you should be able to: Identify the basic components of shareholders’ equity. Explain the characteristics of the basic types of shares. Distinguish the terms related to share capital. Differentiate par value from no-par value shares. Record the share issuances for cash. Illustrate the share subscription process including delinquency sale. Classify and explain the features of the types of share-based payments. State the measurement rules for equity-settled share-based payment transactions. 9. Illustrate share-based payments to non-employees and to employees. 10. Record share capital authorization and issuance using the journal and the memorandum entry methods. 11. Define treasury stock. 12. Record purchase, reissuance and retirement of treasury stocks. 13. Show the treatment of donated capital. 14. Identify and discuss the other share capital transactions. 03 ASIST SRO oe A corporation that has produced such renowned successes as the Model T, Mustang, Taurus, F150, Lynx, Galaxy, Chateau; Expedition and Explorer, and such a dismal failure as the Edsel, would have some interesting tales to tell. Henry Ford was a defiant visionary from the day Ford Motor Company was formed in 1903. His goal from day 1 was to design a car he could mass-produce and sell at a price that was affordable to the masses. He accomplished this goal, and by 1920, 60% of all vehicles on American road were Fords. Henry Ford was intolerant of anything that stood between him and success. In the early years, Ford issued shares to the public in order to finance the corporation’s exponential growth. In 1916, he decided that, 'to retain funds to finance expansion, the corporation would skip a dividend payment to its shareholders. The shareholders sued. Henry Ford’s reaction was swift and direct: if the shareholders did not see things his way, he