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Topic Area: Financial accounting standards. Extensively answer the following questions: 1. Identify the authoritative literature that...

Topic Area: Financial accounting standards. Extensively answer the following questions:

1. Identify the authoritative literature that addresses disclosure of information about equity.

2. What information about securities must companies disclose?

3. What information about “Securities with Preferences” (i.e. Preferred Stock) must companies disclose?

Business   Accounting   
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Homework Answers

Answer #1

1) The authoritative literature that addresses disclosure of information about equity is called SFAS No.129; “Disclosure of Information about Capital Structure”

2) SFAS 129, Par 4 states that an entity in summary form shall explain, within its financial statements, the pertinent privileges and rights of the several securities outstanding. Furthermore entity shall disclose within its financial statements the number of shares issued upon conversion, exercise, or satisfaction of needed conditions during at least the most recent annual fiscal period and any subsequent interim period presented

3) An information regarding the par value, issued shares, authorized shares, and outstanding shares must be disclosed for preferred stock. The preferred stock must be listed first in the stockholders' equity section because of the preference in dividends and during liquidation.

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