tailieunhanh - Lecture Financial reporting and analysis (6/e) - Chapter 15: Financial reporting for owners' equity

Chapter 15 - Financial reporting for owners equity. After studying this chapter you will be able to understand: Why some financing transactions—like debt repurchases—produce reported gains and losses, while others—like stock repurchases—do not? Why companies buy back their stock, and how they do it? Why some preferred stock resembles debt, and how preferred stock is reported on financial statements? | Financial Reporting for Owners’ Equity Revsine/Collins/Johnson/Mittelstaedt/Soffer: Chapter 15 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education Learning objectives Why some financing transactions—like debt repurchases—produce reported gains and losses, while others—like stock repurchases—do not. Why companies buy back their stock, and how they do it. Why some preferred stock resembles debt, and how preferred stock is reported on financial statements. How and when retained earnings limits a company’s distributions to common stockholders. How to interpret the balance sheet items that constitute shareholders’ equity. 15- Learning objectives: Concluded How to calculate basic EPS and diluted EPS, and whether EPS is a meaningful number. What GAAP says about employee stock options, and why GAAP’s accounting treatment has been so controversial. How and why GAAP understates the true cost of convertible debt and how IFRS guidelines avoid this understatement. 15- Overview Why statement readers must understand the accounting and reporting conventions for owners’ equity: Appropriate income measurement Why are bond interest payments an expense, while dividend payments are not an expense? Linkage to equity valuation How does a company’s stock options, warrants, and convertible instruments affect EPS? Legality of corporate distributions to owners How much cash can be legally distributed to owners as dividends? Compliance with contract terms and restrictions How should “hybrid” securities be classified—as debt or equity? 15- Appropriate income measurement: Entity and proprietary views of the firm Entity view of the firm: Proprietary view of the firm: Assets Liabilities + Owners’ equity This view focuses on the firm’s total assets because they drive economic performance. Capital sources are lumped together. = Assets – Liabilities Owners’ equity = This view focuses on | Financial Reporting for Owners’ Equity Revsine/Collins/Johnson/Mittelstaedt/Soffer: Chapter 15 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education Learning objectives Why some financing transactions—like debt repurchases—produce reported gains and losses, while others—like stock repurchases—do not. Why companies buy back their stock, and how they do it. Why some preferred stock resembles debt, and how preferred stock is reported on financial statements. How and when retained earnings limits a company’s distributions to common stockholders. How to interpret the balance sheet items that constitute shareholders’ equity. 15- Learning objectives: Concluded How to calculate basic EPS and diluted EPS, and whether EPS is a meaningful number. What GAAP says about employee stock options, and why GAAP’s accounting treatment has been so controversial. How and why GAAP understates the true .