微觀經(jīng)濟(jì)學(xué)dividends,retainedearningsandincomereporting(文件)
【正文】 reference shareholders and $40 000 to ordinary shares) Share dividends ? A share dividend is pro rata distribution to shareholders of the pany’s own shares ? Results in a decrease in retained earnings and an increase in share capital ? Does not decrease total assets or total shareholders’ equity PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 12 Share dividends continued Reasons for issuing share dividends – To satisfy shareholders’ dividend expectations without spending cash – To increase the marketability of pany’s shares by increasing the number of shares and therefore reducing market price per share – To emphasise that a portion of shareholders’ equity has been permanently reinvested in the business and unavailable for cash dividends PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 13 Share dividends continued Entries for share dividends – Entry when dividend is declared – Entry when dividend is paid PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 14 Jan 20 Share Dividends Payable 75 000 Ordinary Share Capital 75 000 (To record the issue of 5000 shares valued at $75 000 as a share dividend) Dec 1 Retained Earnings (or Share Dividends Declared) 75 000 Share Dividends Payable 75 000 (To record declaration of 10% share dividend) Share dividends continued Effects of share dividends ? The position of shareholders’ equity changes: –Retained earnings decreases and –Share capital increases ? But total shareholders’ equity remains unchanged PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 15 Share splits ? A share split involves the issue of additional shares according to the percentage ownership of shareholders ? This results in a reduction in the stated value per share –., a 2for1 split means that one share with a value of $10 will be exchanged for 2 shares each with a value of $5 PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 16 Share splits continued ? A share split does not effect the total equity of the pany ? The purpose of a share split is to increase the marketability of the shares by lowering the market price per share ? A share split does not affect the balance in shareholders’ equity accounts and therefore a journal entry is not required PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 17 Share splits continued ? Differences between effects of share splits and share dividends PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 18 Item Share Split Share Dividend Total share capital No change Increase Total retained earnings No change Decrease Value per share Decrease No change Dividend reinvestment plans ? Many panies offer dividend reinvestment plans (DRP) to their shareholders ? Shareholders can reinvest all or part of their cash dividend by purchasing additional shares usually at a discount price ? A DRP has the same effect as a share dividend PowerPoint presenta
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