Generally Accepted Accounting Principles
in the United States

U.S. GAAP Codification Accounting Topics

Stockholders' Equity
(SFAS No. 129)

Principles of AccountingU.S. GAAP Financial Reporting Guide
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Stockholders' Equity

SFAS No. 129
Statement of Financial Accounting Standards (SFAS) No. 129
        a.  Disclosure of Information about Capital Structure
        b.  Issued in February 1997

SFAS No. 129
           --> Consolidates capital structure related disclosures
                 required by
APB Opinion No. 10, 15 and SFAS No. 47.

 Required Disclosures about Securities
           a.  Dividend and liquidation preferences
           b.  Participation rights
           c.  Call prices and dates
           d.  Conversion rates and dates
           e.  Exercise prices and dates
           f.   Sinking-fund requirements
           g.  Unusual voting rights
           h.  Contracts to issue additional shares
           i.   Number of shares issued on conversion or exercise
           j.   Changes in the number of shares of stock
           k.  Liquidation preference for preferred stock
           l.   Amounts at which preferred stock may be called
           m. Amounts at which preferred stock is subject to redemption
           n.  Amounts of arrearages in cumulative preferred dividends
           o.  Amount of redemption requirements for redeemable stock
 Preferred Stock
           --> A security with preferential rights (compared to common stock)

 Participation Rights
           --> Rights to receive dividends or returns

APB Opinion No. 12

 Disclosures of Changes in Capital Accounts
           a.  Changes in the accounts comprising stockholders' equity
           b.  Changes in the number of shares of stock

ARB No. 43, Chapter 1A

 Stock Issued for Property
           --> It is not permissible to treat
                 the par value of stock issued
                 as the cost of property acquired.

APB Opinion No. 14

Debt with stock detachable purchase warrants
           --> Proceeds are allocated to the two components.
                 a.  debt security
                 b.  warrants

Allocation is based on
           --> a.  fair value of debt securities without warrants
                 b.  fair value of warrants

Portion of proceeds allocated to debt security
           --> recorded as liability.

Portion of proceeds allocated to warrants
           --> recorded as additional paid-in capital.

APB Opinion No. 29
 Cost of an asset acquired 
             = Fair value of the asset surrendered 
                + Cash (boot) paid
                -  Cash (boot) received

           --> recorded at the fair value of the asset transferred
           --> gain or loss is recognized on the disposition of the asset.

ARB No. 43, Chapter 7B

 Stock Dividend
           --> Issuance of its own stock to shareholders
                 without consideration
           --> to distribute retained earnings to shareholders.

 Accounting for Stock Dividend
           --> Retained earnings is transferred
                 to capital stock and additional paid-in capital
           --> for the amount of
                 fair value of additional shares issued
 Stock Split
           --> Issuance of its own stock to shareholders
                 without consideration
           --> to reduce per share price
                 by increasing number of outstanding shares.

 Accounting for Stock Split
           --> Retained earnings is not transferred to capital stock.

 Issuance of additional shares of more than 25 percent
           --> Recorded as stock splits.

APB Opinion No. 6

 Treasury Stock
           --> Capital stock acquired (and held)
                 by the entity that issued such stock.

 Treasury stock is
           --> reported separately
                 as a deduction from the total of
                       (capital stock, additional paid-in capital, and retained earnings.)

 Gains on Sales of Treasury stock
           --> credited to additional paid-in capital.

 Losses on Sales of Treasury stock
           --> charged to additional paid-in capital
                       (up to previous gains on sales of same class of stock)
           --> remaining losses are
                 charged to retained earnings.
 Retirement of Treasury Stock
           An excess of purchase price over par (or stated) value
           --> charged to
                      additional paid-in capital (limited to pro rata portion)
                      and retained earnings.

           --> may be charged (entirely)
                 to retained earnings.

U.S. GAAP Codification
Accounting Topics
Inventory Valuation Methods
Depreciation Methods
Revenue Recognition Principle
Accrual Basis vs. Cash Basis Accounting
Basics of Journal Entries
Ratios for Financial Statement Analysis
Overview of Financial Statements

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