Question
Stockholders' equity is subdivided into components: (1) paid-in capital or contributed capital, (2) retained earnings, and (3) treasury stock, if any. Treasury stock (cost method)
Stockholders' equity is subdivided into components: (1) paid-in capital or contributed capital, (2) retained earnings, and (3) treasury stock, if any. Treasury stock (cost method) reports the amount paid by the corporation to purchase its own shares of stock. The total of stockholders' equity is the book value of the corporation. You should realize that the book value or stockholders' equity is not an indication of the market value of the corporation. Retained earnings report the cumulative net income since the start of the corporation minus the dividends declared since the start of the corporation. The paid-in capital component reports the amounts the corporation received when it issued its common and preferred (if any) stock.
The items that appear in the stockholder's equity section are paid in capital in excess of par value, retained earnings, paid in capital from treasury stock, accumulated other comprehensive income, common stock, and preferred stock. The Disclosure that is made in the notes of account regarding stockholders equity are adjustments to additional share capital etc, retained earnings note disclosure, class of stock disclosures, shares issued, ending balance, and redemption of share premium.
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