f12CorporationsIncomeandTaxesBusiness(公司金融会

Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,C12 -,40,Learning Objectives,Power Notes,1.Corporate Income Taxes,2.Unusual Income Statement Items,3.Earnings Per Common Share,4.Reporting Stockholders Equity,5.Comprehensive Income,6.Accounting for Investment in Stocks,7.Business Combinations,8.Financial Analysis and Interpretation,Chapter F12,C12,Corporations: Income and Taxes,Stockholders Equity, Investments in Stocks,Corporate Income Taxes,Unusual Income Statement Items,Earnings Per Common Share,Reporting Stockholders Equity,Long-Term Stock Investments,Business Combinations,Price-Earnings Ratio,Slide #Power Note Topics,3,10,16,22,28,3638,Note:,To select a topic, type the slide # and press Enter.,Power Notes,Chapter F12,Corporations: Income and Taxes,Stockholders Equity, Investments in Stocks,Corporate Income Taxes,Corporations are,taxable entities,that must pay income taxes.,Because income tax is often a,significant amount, it is reported as a,special deduction,.,Taxable income,is determined according to,tax laws,which are often different from,income before income tax,according to,GAAP,.,Differences in tax law and GAAP create some,temporary differences,that reverse in later years.,Temporary differences,do not change or reduce the total amount of tax paid, they affect only the timing of when the taxes are paid.,Temporary Differences in Reporting Revenues,Report NowTaxable Later,Report LaterTaxable Now,Example:,Income reporting methods.,Point-of-Sale Method,Installment Method,Financial,Reporting,Tax,Reporting,Example:,Cash collected in advance.,When,Earned,When,Collected,Revenue,Reporting,Temporary Differences in Reporting Expenses,Deduct NowDeduct Later,Deduct SlowerDeduct Faster,Example:,Product warranty expense.,When,Estimated,When,Paid,Financial,Reporting,Tax,Reporting,Example:,Methods,of depreciation.,Straight-Line,Method,MACRS,Method,Expense,Deductions,DateDescriptionDebitCredit,Income Tax Accounting,Income Tax Expense,120,000,Income Tax Payable,40,000,Deferred Income Tax Payable80,000,Deferred Income Tax Payable 48,000,Income Tax Payable 48,000,1st Yr.,Income tax allocation due to timing differences.,Financial reporting and tax reporting summary:,Income before tax,$300,000 x 40% rate = $120,000,Taxable income,$100,000 x 40% rate,=,$40,000,Record $48,000 of deferred tax as payable.,2nd Yr.,DateDescriptionDebitCredit,Income Tax Accounting,Financial reporting and tax reporting summary:,Income before tax,$300,000 x 40% rate = $120,000,Taxable income,$100,000 x 40% rate,=,$40,000,Income Tax Expense,120,000,Income Tax Payable,40,000,Deferred Income Tax Payable80,000,The,income tax expense,is deducted from the,income before tax,reported on the income statement.,1st Yr.,DateDescriptionDebitCredit,Income Tax Accounting,Financial reporting and tax reporting summary:,Income before tax,$300,000 x 40% rate = $120,000,Taxable income,$100,000 x 40% rate,=,$40,000,Income Tax Expense,120,000,Income Tax Payable,40,000,Deferred Income Tax Payable80,000,The,income tax payable,is based on the taxable income and is a current liability due and payable.,1st Yr.,DateDescriptionDebitCredit,Income Tax Accounting,Financial reporting and tax reporting summary:,Income before tax,$300,000 x 40% rate = $120,000,Taxable income,$100,000 x 40% rate,=,$40,000,Income Tax Expense,120,000,Income Tax Payable,40,000,Deferred Income Tax Payable80,000,The,deferred income tax payable,is a,deferred liability,due later as the,timing differences,reverse and the taxes become due.,1st Yr.,Unusual Income Statement Items,Three types of,unusual items,are:,1. Results of,discontinued operations,.,2.,Extraordinary items,of gain or loss.,3.A,change,from one,generally accepted accounting principle to another,.,These items and the,related tax effects,are,reported separately,in the income statement.,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Net sales$9,600,000,Income from continuing operations,before income tax$1,310,000,Income tax620,000,Income from continuing operations$ 690,000,Loss on discontinued operations (Note A)100,000,Income before extraordinary items and cumulative,effect of a change in accounting principle$ 590,000,Extraordinary item:,Gain on condemnation of land, net of,applicable income tax of $65,000150,000,Cumulative effect on prior years of changing to,different depreciation method (Note B)92,000,Net income$832,000,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Net sales$9,600,000,Income from continuing operations,before income tax$1,310,000,Income tax620,000,Income from continuing operations$ 690,000,Loss on discontinued operations (Note A)100,000,Income before extraordinary items and cumulative,effect of a change in accounting principle$ 590,000,Extraordinary item:,Gain on condemnation of land, net of,applicable income tax of $65,000150,000,Cumulative effect on prior years of changing to,different depreciation method (Note B)92,000,Net income$832,000,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Net sales$9,600,000,Income from continuing operations,before income tax$1,310,000,Income tax620,000,Income from continuing operations$ 690,000,Loss on discontinued operations (Note A)100,000,Income before extraordinary items and cumulative,effect of a change in accounting principle$ 590,000,Extraordinary item:,Gain on condemnation of land, net of,applicable income tax of $65,000150,000,Cumulative effect on prior years of changing to,different depreciation method (Note B)92,000,Net income$832,000,Differences created by unusual items: discontinued operations, extraordinary items, and change in methods.,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Net sales$9,600,000,Income from continuing operations,before income tax$1,310,000,Income tax620,000,Income from continuing operations$ 690,000,Loss on discontinued operations (Note A)100,000,Income before extraordinary items and cumulative,effect of a change in accounting principle$ 590,000,Extraordinary item:,Gain on condemnation of land, net of,applicable income tax of $65,000150,000,Cumulative effect on prior years of changing to,different depreciation method (Note B)92,000,Net income$832,000,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Net sales$9,600,000,Income from continuing operations,before income tax$1,310,000,Income tax620,000,Income from continuing operations$ 690,000,Loss on discontinued operations (Note A)100,000,Income before extraordinary items and cumulative,effect of a change in accounting principle$ 590,000,Extraordinary item:,Gain on condemnation of land, net of,applicable income tax of $65,000150,000,Cumulative effect on prior years of changing to,different depreciation method (Note B)92,000,Net income$832,000,Reporting Earnings Per Common Share,1. Income from,continuing operations,.,2.Income,before extraordinary items,and the,cumulative effect of a change in accounting principle,.,3.,Extraordinary items,and the,cumulative effect of a change in accounting principle,.,4.,Net income,.,Earnings per share,(EPS) is the net income per share of,common stock outstanding,. When unusual items exist, EPS should be reported for:,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Income from continuing operations $690,000,Net income$832,000,Earnings per common share:,Income from continuing operations$ 3.45,Loss on discontinued operations.50,Income before extraordinary item and cumulative,effect of a change in accounting principle2.95,Extraordinary item.75,Cumulative effect on prior years of changing,to a different depreciation method.46,Net income$ 4.16,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Income from continuing operations $690,000,Net income$832,000,Earnings per common share:,Income from continuing operations$ 3.45,Loss on discontinued operations.50,Income before extraordinary item and cumulative,effect of a change in accounting principle2.95,Extraordinary item.75,Cumulative effect on prior years of changing,to a different depreciation method.46,Net income$ 4.16,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Income from continuing operations $690,000,Net income$832,000,Earnings per common share:,Income from continuing operations$ 3.45,Loss on discontinued operations.50,Income before extraordinary item and cumulative,effect of a change in accounting principle2.95,Extraordinary item.75,Cumulative effect on prior years of changing,to a different depreciation method.46,Net income$ 4.16,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Income from continuing operations $690,000,Net income$832,000,Earnings per common share:,Income from continuing operations$ 3.45,Loss on discontinued operations.50,Income before extraordinary item and cumulative,effect of a change in accounting principle2.95,Extraordinary item.75,Cumulative effect on prior years of changing,to a different depreciation method.46,Net income$ 4.16,Jones CorporationIncome StatementFor the Year Ended December 31, 2003,Income from continuing operations $690,000,Net income$832,000,Earnings per common share:,Income from continuing operations$ 3.45,Loss on discontinued operations.50,Income before extraordinary item and cumulative,effect of a change in accounting principle2.95,Extraordinary item.75,Cumulative effect on prior years of changing,to a different depreciation method.46,Net income$ 4.16,Paid-in capital,:,Preferred $5 stock, cumulative, $50 par,(2,000 shares authorized and issued)$100,000,Excess of issue price over par10,000$ 110,000,Common stock, $20 par,(50,000 shares authorized, 45,000 issued) $900,000,Excess of issue price over par132,0001,032,000,From donated land60,000,Total paid-in capital$1,202,000,Stockholders Equity,Stockholders Equity,Paid-in capital,:,Preferred $5 stock, cumulative, $50 par,(2,000 shares authorized and issued)$100,000,Excess of issue price over par10,000$ 110,000,Common stock, $20 par,(50,000 shares authorized, 45,000 issued) $900,000,Excess of issue price over par132,0001,032,000,From donated land60,000,Total paid-in capital$1,202,000,Contributed capital,:,Preferred 10% stock, cumulative, $50 par,(2,000 shares authorized and issued)$100,000,Common stock, $20 par,(50,000 shares authorized, 45,000 issued) $900,000,Additional paid-in capital202,000,Total contributed capital$1,202,000,Shareholders Equity,Stockholders Equity,Shareholders Equity,Contributed capital,:,Preferred 10% stock, cumulative, $50 par,(2,000 shares authorized and issued)$100,000,Common stock, $20 par,(50,000 shares authorized, 45,000 issued) $900,000,Additional paid-in capital202,000,Total contributed capital$1,202,000,Paid-in capital,:,Preferred $5 stock, cumulative, $50 par,(2,000 shares authorized and issued)$100,000,Excess of issue price over par10,000$ 110,000,Common stock, $20 par,(50,000 shares authorized, 45,000 issued) $900,000,Excess of issue price over par132,0001,032,000,From donated land60,000,Total paid-in capital$1,202,000,Adang CorporationRetained Earnings StatementFor the Year Ended June 30, 2003,Reporting Retained Earnings,Retained earnings, July 1, 2002$350,000,Net income$280,000,Less dividends declared75,000,Increase in retained earnings205,000,Retained earnings, June 30, 2003$555,000,Adang CorporationRetained Earnings StatementFor the Year Ended June 30, 2003,Reporting Retained Earnings,Retained earnings, July 1, 2002$350,000,Net income$280,000,Less dividends declared75,000,Increase in retained earnings205,000,Retained earnings, June 30, 2003$555,000,Adang CorporationRetained Earnings StatementFor the Year Ended June 30, 2003,Reporting Retained Earnings,Retained earnings, July 1, 2002$350,000,Net income$280,000,Less dividends declared75,000,Increase in retained earnings205,000,Retained earnings, June 30, 2003$555,000,Long-Term Stock Investments,Equity,Method,Cost,Method,Not significant,influence,Significant,influence,Ownership %,Controlling Interest,100%,20%,0%,50%,Long-Term Stock Investments,Equity,Method,Cost,Method,Not significant,influence,Significant,influence,Ownership %,Controlling Interest,100%,20%,0%,50%,With less than 20% ownership the buyer does,not,usually have significant influence. The buyer uses the,cost method,to account for the investment.,Long-Term Stock Investments,Equity,Method,Cost,Method,Not significant,influence,Significant,influence,Ownership %,Controlling Interest,100%,20%,0%,50%,Ownership over 20% usually indicates,significant influence,.,The buyer uses the,equity method,to account for the investment.,Long-Term Stock Investments,Equity,Method,Cost,Method,Not significant,influence,Significant,influence,Ownership %,Controlling Interest,100%,20%,0%,50%,The corporation owning all or a majority of the voting stock is called the,parent,company. The controlled corporation is the,subsidiary,company.,Consolidated financial statements,are prepared which combinine the operating results of the two entities.,Long-Term Stock Investments,Equity,Method,Cost,Method,Not significant,influence,Significant,influence,Ownership %,Controlling Interest,100%,20%,0%,50%,DateDescriptionDebitCredit,Cost Method,Investment in Stock5,940,Cash5,940,Cash200,Dividend Revenue200,Mar. 1,Purchased 100 shares of Compton Corp.,stock at 59 plus brokerage fee of $40.,Received $2 cash dividend from Compton Corp.,Dec. 31,The,cost method,is used when the buyer does,not,have significant influence over the,operating and financing activities,of the investee.,DateDescriptionDebitCredit,Equity Method,Investment in Brock Corp. Stock350,000,Cash 350,000,Investment in Brock Corp. Stock 42,000,Income of Brock Corp.42,000,Cash18,000,Investment in Brock Corp. Stock 18,000,Jan. 2,Purchased 40% of Brock Corporation for $350,000.,Brock Corporation reports net income of $105,000.,Dec. 31,Brock Corporation reports total dividends of $45,000.,Dec. 31,DateDescriptionDebitCredit,Sale of Long-Term Stock Investment,Cash17,500,Investment in Stock15,700,Gain on Sale of Investments1,800,Mar. 1,Sold stock of Drey Inc. for $17,500.,Stock has a carrying value of $15,700.,When shares of stock are sold, the,investment account is credited,for the,carrying value,(book value) of the shares sold.,Business Combinations,Many businesses combine in order to produce more,efficiently or to diversify,product lines.,A,merger,combines two corporations by,one acquiring the properties of another,that is then,dissolved,.,A,consolidation,is the,creation of a new corporation, to which the combined assets and liabilities of the old corporations are transferred.,Business Combinations,Mergers:,Company A acquires company B.,The assets and liabilities of B are transferred to A and,B is then dissolved,.,Consolidations:,Company A acquires company B.,The assets and liabilities of,both,A and B are transferred to a new company C and,A and B are then dissolved,.,Mergers,A,B,Consolidations,C,A,B,Analyzing Stock Investments,Accounting: Earnings Per Share,Net Income,Common Shares,Investing: Price - Earnings Ratio,Market Price Per Share,Earnings Per Share,Earnings,Per Share,=,Price-,Earnings,Ratio,=,Price Earnings Ratio,The,price-earnings ratio,represents how much the market is willing to pay per dollar of a companys earnings. This indicates the markets assessment of a firms,growth potential,and,future earnings prospects,.,The,price-earnings ratio,indicates that a share of common stock was selling for 10 times earnings for 1999 and 12.5 times for,2000,.,An example:,2000,1999,Market price per share$20.50$13.50,Earnings per share$1.64 $1.35,Price-earnings ratio12.5 10.0,Note:,To see the topic slide, type 2 and press Enter.,This is the last slide in Chapter F12.,Power Notes,Chapter F12,Corporations: Income and Taxes,Stockholders Equity, Investments in Stocks,