Accounting for

Topic
Corporations

9 100 Shares

Corporations?
$1 par value

Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007
 Corporate Form of Organization
An entity
created by law.

Existence is Privately Held

Ownership
separate from
can be
owners.

Has rights and

privileges.
Publicly Held

Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007
 Characteristics of Corporations
Advantages
 Separate Legal Entity
 Limited Liability of Shareholders
 Transferable Ownership Rights
 Continuous Life
 Shareholders Are Not Corporate Agents
 Ease of Capital Accumulation
Disadvantages
 Governmental Regulation
 Corporate Taxation
Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007
 Organizing and Managing a Corporation
Shareholders

Board of Directors

President, Vice-President,
and Other Officers

Employees of the Corporation

Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007
 Organizing and Managing a Corporation
Corporate Organization Chart
shareholders
Ultimate
Stockholders usually meet
control.
once a year.
Selected by a
Board of Directors Overall
vote of the
responsibility
shareholders.
for managing
President the company.

Secretary Vice President Vice President Vice President

Finance Production Marketing

Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007
 Rights of Shareholders
Vote at shareholders’ meetings.
Sell shares.
Purchase additional share of shares.
Receive dividends, if any.
Share equally in any assets remaining
after creditors are paid in a liquidation.

Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007
 Share Certificates and Transfer

Each unit of
ownership
When is
the share
called a share
is sold, the of
share.
shareholder
Asigns
shareacertificate
transfer
endorsement
serves as proof on
theaback
that of the
shareholder
share certificate.
has purchased
shares.

Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007
 Basics of Capital Share
Total amount of share that a
corporation’s M & A authorizes it to sell.

Shareholders' Equity 2005 2004

Common Share, par value $.01;
authorized 250,000,000 shares; issued
92,556,295 shares in 2005; 111,015,133
shares in 2004 $925,563 $1,110,151

Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007
 Basics of Capital Share
Total amount of share that has been
issued to shareholders.

Shareholders' Equity 2005 2004

Common Shares, par value $.01;
authorized 250,000,000 shares; issued
92,556,295 shares in 2005; 111,015,133
shares in 2004 $925,563 $1,110,151

Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007
 Selling (Issuing) Share


Par value is an
arbitrary amount Market price is the
assigned to each amount that each
share of share when share of share will
it is authorized. sell for in the market.
Larson, Wild, Chiapetta, Ropidah, Haslinda, Aryati, Liana © The McGraw-Hill Companies, Inc., 2007