COMMERCE 1AA3 Lecture Notes - Lecture 35: Retained Earnings, Income Statement
2 Dec 2016
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Share capital (contributed capital: results from the sale of shares. Contributed surplus: equity resulting from business transaction other than the sale of common shares. Accumulated other comprehensive income: is what should have been reported on the income statement as gains/losses but due to negotiation, it goes straight to the balance sheet. Asset received is recorded at current market value. The company gives money back to the shareholders and takes their shares back: normally retired and cancelled. Reasons why: the company needs the repurchased shares to ful l future share issuance commitments, the purchase may help support the share"s current market price, management wants to avoid takeover by an outside company. Not to increase shareholders" value but to protect their own jobs. Effect on nancial statements: assets and shareholders" equity would decrease. Distributions of income by a corporation to its shareholders on a pro rate basis. The day the company decides to pay out dividends.
