Kế toán, kiểm toán - Chapter 18: Company performance: owners’ equity and financial position

Chapter 18Company Performance: Owners’ Equity and Financial PositionCopyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin18-*What are the Components of the Statement of Owners’ Equity?Comprehensive incomeForeign currency translation adjustmentsPension liability adjustmentsUnrealized gains/losses from available-for-sale securities (see Chapter 17 discussion)Retained earningsNet incomeDividends declaredOther disclosuresChanges in common, preferred, and treasury stock18-*What is a Prior Period Adjustment?Correction of an error made in previous period that impacted net incomeSince revenue and expense accounts are closed to retained earnings, retained earnings is corrected for the error (net of tax)18-*What are the Common Asset Classifications on the Balance Sheet?Current assetsSold or consumed within one year InvestmentsLong-term nonoperational investmentsProperty, plant, and equityLong-term operational investments18-*Asset Classifications ContinuedIntangiblesLong-term operational investments (legal rights)OtherDeferred charges18-*What are the Common Liability Classifications on the Balance Sheet?Current liabilitiesPaid or discharged within on yearLong-term debtLong-term obligations to creditorsOtherDeferred charges, pensions, etc.18-*How is Stockholders’ Equity Reported on the Balance Sheet?Contributed capitalCommon stock, preferred stock, and additional paid-in capital (from common, preferred, and treasury)Retained earningsAccumulated comprehensive income itemsTreasury stockContra owners’ equity18-*Why are Current Costs Often used for Internal Reporting?Historical costs do not represent the current value of the asset, so determining the replacement cost or current selling price of the asset may be preferableExample: Retained earnings & balance sheet, tax rate 25%, in thousandsAccounts payable, $950Accounts receivable, $870Accumulated depreciation, buildings, $304Accumulated depreciation, equipment, $80Accrued liabilities, $174Additional paid-in capital, $160Allowance for uncollectible accounts, $50Bonds payable, $2,200Buildings, $2,080Cash, $254Common stock, $1,180Copyrights & patents (net), $675Cost of goods sold, $9,600Discount on notes payable, $20Dividend payable, $300 ($0 beg)Dividend revenue, $62Equipment, $1,200Gain on discontinued operations (net), $100Gain on sale of equipment, $60Interest expense, $422Interest revenue, $64Inventory, $1,194Investment in available-for-sale securities, $1,192Land, $620Long-term notes payable, $1,80018-*Example continuedNotes payable, due in 120 days, $180Premium on bonds payable, $45Preferred stock, $800Prepaid assets (current), $120Prior period adjustment (net), $196Retained earnings (beg), $421Sales, $16,000Selling & administrative expense, $5,800Trading securities, $306Treasury stock, $382Required:Prepare the statement of retained earnings.Prepare the classified balance sheet.18-*Answer: Statement of Retained EarningsBeginning retained earnings$421Prior period adjustment196Adjusted beginning balance$617Add net income (Chapter 17)373Less dividends declared (see Dividends Payable)300Ending retained earnings$69018-*Answer: Balance Sheet (assets)Cash$254Trading securities306Accounts receivable, net820Inventory1,194Prepaid assets120$2,694Investment in available-for-sale securities$1,1921,192Land$620Buildings, net1,776Equipment, net1,1203,516Copyrights & patents, net$675675Total assets$8,07718-*Answer: Balance Sheet (liabilities & stockholders’ equity)Accounts payable$950Accrued liabilities174Note payable, due in 120 days180Dividends payable300$1,604Long-term note payable, net$1,780Bonds payable, net2,245$4,025Common stock$1,180Preferred stock800Additional paid-in capital160Retained earnings690Treasury stock(382)2,448Total liabilities & stockholders’ equity$8,07718-*