AFM123 Chapter 11: ch11.docx
3 Mar 2014
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Shareholders" equity: components: common shares, preferred shares, contributed surplus, retained. Private: preferred shares, carry a dividend entitlement and rank ahead of c/s in a liquidation, dividends only paid if board of directors declare, order of payout in liquidation. If you lend money you can either take security or not. All the people with the accounts payable are take security unsecured. When you incorporate; you have to follow your charter and say how many shares you want authorized and how many a corporation can issue (can be unlimited for common shares) Number of shares the corporation has issued for cash. Number fo shares currently held by shareholders. Issue 5 000 000 shares for 000. 000: buy assets for shares, e. g. acquire an asset with a fair market value of 000 (car) for 20 000 shares. Recall: a + e + d = l + c + r: issues preferred shares for 000.
