What is Stock in Accounting? (Part 3)

Example of issuance of Common Stock

Let's assume that a company wants to raise $10,000 through the issuance of common stock. At the time the stock is sold the market price is $50 per share. The company will, therefore, have to issue 200 shares. Let us also assume that the par value of the stock is $10. Here is the journal entry that the company will make following the sale of the shares:

Cash (200 shares x $50)                                           10,000

Common Stock (200 shares x $10))                           2,000

Add’l Paid in Capital (10,000 - 2,000)                       8,000

The journal entry involves the following aspects:

1.      Cash is increased by the number of shares sold multiplied by the market price of the stock to reflect the receipt of the proceeds

2.      Stockholder's equity is increased by $10,000 to reflect the issuance of the stock. This total is divided between the common stock account and the additional paid in capital account. Both of these are stockholder's equity accounts.

3.      The common stock account is increased by the par value multiplied by the number of shares sold. The par value is an arbitrary amount set by the board of directors when the class of stock is authorized by the shareholders for issuance.

4.      The additional paid-in-capital account is increased by the excess of the proceeds from the stock sale less that portion of the proceeds credited to the common stock account.

Common stock can also be authorized as no par. In this case, no par value is assigned to the shares. From an accounting standpoint, the only effect of this designation is that the common stock account is credited for the full amount of the proceeds and no additional paid-in-capital account exists as follows:

Cash (200 shares x $50)                                              10,000

Common Stock (200 shares x $50))                            10,000

A third form for the stock is no par with a stated value. From an accounting standpoint, stated value is treated the same way as par value. For example, assume that the common stock in this example is no par stock with a stated value of $5. The journal entry for the stock issuance would be as follows:

Cash (200 shares x $50)                                              10,000

Common Stock (200 shares x $5))                               1,000

Add’l Paid in Capital (10,000 - 1,000)                         9,000

Stock issuance costs:

When companies issue common stock, the stock is sold through brokers to their retail or institutional clients. These brokers earn a fee for their services and the proceeds received by the company is reduced accordingly. There are two ways in which these stock issuance costs can be accounted for under GAAP.

1.      Treat the issue costs as a reduction of the amounts paid in. The debit to cash and the credit to additional paid-in-capital are reduced accordingly. This method results in a smaller increase in stockholder's equity upon issuance of the shares.

2.      Capitalize the amount as an organizational cost on the balance sheet and amortize the intangible asset similarly to the amortization of goodwill. This method results in a greater increase in stockholder's equity initially and reduced profitability in the future as the amortization expense is recorded.

What is Stock in Accounting? (Part 2)

What is Common Stock and Preferred Stock?

Common Stock

The holders of common stock can reap two main benefits: capital appreciation and dividends. Capital appreciation occurs when a stock's value increases over the amount initially paid for it. The stockholder makes a profit by selling the stock at its current market value after capital appreciation.

Dividends, which are taxable payments, are paid to a company's shareholders from retained or current earnings. Typically, dividends are paid to stockholders on a quarterly basis. Payments are usually made in the form of cash, but other property or stock can also be used. Payment of dividends, however, hinges on a company's capacity to grow -- or maintain -- current or retained earnings. This means ongoing payment of dividends cannot be guaranteed.

Common stock has the additional benefit of enabling its holders to vote on company issues and when choosing the company's leadership. Usually, one share of common stock equals one vote.

Preferred Stock

Preferred stock doesn't offer the same profit potential as common stock, but it’s a more stable investment vehicle because it guarantees a regular dividend that isn't directly tied to the market as with the price of common stock. Preferred stock guarantees dividends, which common stock does not. The price of preferred stock is tied to interest rate levels; it tends to decrease if interest rates go up and increase if interest rates fall.

Preferred stockholders get priority when it comes to the payment of dividends. If a company is liquidated, preferred stockholders get paid before those who own common stock. In addition, if a company goes bankrupt, preferred stockholders enjoy priority distribution of the company's assets; holders of common stock don't receive any corporate assets until preferred stockholders have been compensated.

Like common stock, preferred stock represents ownership in a company. However, owners of preferred stock do not get voting rights in the business.

The difference between Common Stock and Preferred Stock

Common Stock	Preferred Stock
The capital stock (or simply stock) of a business entity represents the original capital paid into or invested in the business by its founders. It's a security for creditors since it cannot be withdrawn to the detriment of the creditors.	Preferred stock, also called preferred shares, preference shares, or simply preferred, is a special equity security that has properties of both equity and a debt instrument and is generally considered a hybrid instrument.

 

What is Stock in Accounting? (Part 1)

Common stock is a form of corporate equity ownership, a type of security. The word “common stock” widely being used in the United Stated, which the rest parts of world, is using the word “voting share” or “ordinary share”.

Other than common stock, there is another type of stock, which is called as preferred stock. If both types of stock exist, common stock holders cannot be paid dividends until all preferred stock dividends (including payments in arrears) are paid in full.

In the event of bankruptcy, common stock investors receive any remaining funds after bondholders, creditors (including employees), and preferred stock holders are paid. As such, common stock investors often receive nothing after a bankruptcy.

On the other hand, common shares on average perform better than preferred shares or bonds over time. Common stock usually carries with it the right to vote on certain matters, such as electing the board of directors. However, a company can have both a "voting" and "non-voting" class of common stock.

Holders of common stock are able to influence the corporation through votes on establishing corporate objectives and policy, stock splits, and electing the company's board of directors. Some holders of common stock also receive preemptive rights, which enable them to retain their proportional ownership in a company should it issue another stock offering. There is no fixed dividend paid out to common stock holders and so their returns are uncertain, contingent on earnings, company reinvestment and efficiency of the market to value and sell stock.

Additional benefits from common stock include earning dividends and capital appreciation.

Pasar Lambak 2.0

TY UTHM students and staffs, as well as people around this town for supporting us.

Here are some of the pictures taken:

Summary of the day: It was hilarious! No matter you earn the income or not, but it will definitely be an experience that you wont have it again. Congratulation to every member of Pasar Lambak 2.0 for the cooperation. Special thanks to Tamiya Batu Pahat for the fun race.

Pasar Lambak 2.0

Once again, Pasar Lambak will be held on 25-27th May 2014. It is an annually event, that will be carried out by Entrepreurship student (Subject code: BPK20802) of Faculty of Computer Science and Information Technology (FSKTM) UTHM. This year, the program will be organize along with Presentation Week of Degree Project of our faculty.

Date: 25-27th May 2014
Time: 9AM-6PM
Venue: Dataran Anggerik, UTHM

Come and join us!
For my info, www.facebook.com/PasarLambak2014

Happy Teacher's Day

It is a special day for the appreciation of teachers, and may include celebrations to honour them for their special contributions in a particular field area.

Each countries may celebrate it on different date. In Malaysia, we celebrate Teacher's Day on 16th May.

[Wikipedia] This date was chosen because on the same day in 1956, the Federal Legislative Council of the Federation of Malaya endorsed the Razak Report, one of four reports of the Education Committee regarding education in Malaysia. The document, known as the Razak Report after Tun Abdul Razak who was Education Minister at the time, has been the basis of education in Malaysia ever since. Although it is not an official school holiday, celebrations are usually held on May 16, or earlier, if it falls on a Saturday or Sunday.

16th May 2014
PM Najib by his official Twitter (He tweeted 3 tweets)

1. "Every year on May 16, Teachers’ Day will be celebrated across the country to honour the sacrifices made by teachers for their hard work to educate our children and motivate them to become excellent in any of their chosen fields.

2. Indeed, duties and responsibilities undertaken by teachers are full of challenges. The burden rests on their shoulders in producing students who are knowledgeable and competent, who are ready to inherit the struggle and contribute to the national development. We are grateful to all the deserving teachers, who have sacrifice their time and energy and never tired to carry out their responsibilities.

3. On my behalf, and all Malaysians, Happy Teachers’ Day to all of you, educators, for your invaluable contributions, for the sake of the nation prosperity. Thank you, Teacher."


As for me,
I would like to wish every teachers a happy teacher's day, especially to my ex teachers from:

SK Assumption Butterworth
SMK Dato Onn Butterworth
Politeknik Balik Pulau
Uni. Tun Hussein Onn
Supervisors and head department from Osram Opto Semiconductor Penang, Golden Sands Resort Penang, Fuji Electric Malaysia.

I'll forever remember all your taughts :D

Penang World Music Festival Preview Show

 

In conjuction of Penang World Music Festival (13-14 April 2014), Sunway Carnival Mall organized Preview Show during their Fashion Passion Month. Me and Siti Nur Mastura grab this chance to be there for our project for magazine. Since we unable to be to the Festival itself because of the timeframe issue, we went to this preview show. It begin with the launch of the event by YB Danny Law, the exco of tourism for Penang State.

 

N'Faly Kouyaté from West Africa.

 

Me, Siti Nur Mastura and N'Faly Kouyaté

Me with the Kora, an music instrument.

More to come, in our Magazine, stay tune!

Fish keeping as a hobby

Nowadays, youngsters spend more time on gadgets; make it an unhealthy hobby to be. I personally like to rear fish. Since small, I used to keep fish as a part of my hobby.

 

 (Picture 1: My 2feet normal tank @ Parit Raja)

I currently kept 3 dscus, an angelfish and few rednose.

The hardest part to take care is because of the sensitivity from discus to it's surrounding, water and amonia.

(Picture 2: 30" x  18", 8mm glass @ Butterworth. Because of seldom to be at home, i only keep 2 discus here.

Here are some tips for people who like to start this hobby :)

WOMEN COOK AT HOME BUT MEN COOK AT MOST RESTAURANTS AND HOTELS

Being a chef is a very high-pressure job, and men tend to do better in the environment of a professional kitchen. In fact, professional chefs in restaurants have always been largely men, it has never been regarded as a 'female' job.

I wonder, where are all the women gone to, in a field that they should be better in?

From Zero to Hero

BIOGRAPHY

Name: Robert Kuok Hock Nien
Born: 6th October 1923 (91 years old)
Origin: Johor Bahru, Malaysia
Net worth: 11.5 billion (Forbes.com)

Mr. Robert Kuok is a Malaysian Hockchiu entrepreneur. He is the richest man in Malaysia with 11.5 billion net worth. He made his money in sugar, palm oil, shipping, and property.

Born in Johor Bahru, Johor, Robert is the youngest out of three siblings. He graduated from Raffles Institution, Singapore. Back to 1942-1945, he worked in a Japanese Industrial conglomerate, in grains department of Mitsubishi. After his father died in 1948, Robert Kuok and his two brothers founded Kuok Brothers Sdn Bhd in 1949, trading in agricultural commodities. Since then, he never looks back and starts to earn, until now, making him 95th richest in the world. Below are some of the histories of him in business.

But, by just reading up and researching a bit more about this iconic entrepreneur in Asia, it is clear, at least in my point of view, that he invests in industries whom we, as human beings need to survive;

1. Source of Energy/ Food for People (Including sugarcane plantations, sugar refineries, oil)
2. Information (He controls the media with a strong presence in China and he owns a range of publishing companies)
3. Communications/ Transportation (He owns freight companies that help us stay connected in this world of trading)
4. A Roof over our Heads (He owns the luxurious Shangri-La Group and property developments, all tied towards providing us with comforts over our heads)


BUSINESS DEVELOPMENT

1949 – Founded Kuok Brothers Limited
1953 – Kuok (Singapore) Limited
1970 – The Kuok Foundation
1971 – First Shangri-La Hotel, Singapore
1979 – Formed Kuok Hotels, to manage the Rasa Sayang Resort and Spa, Golden Sands Resort in Penang, and The Fijian, Yanuca Island, on Fiji.
1981 – Second Shangri-La Hotel, Kowloon, managed by Westin Hotels & Resorts
1982 – Formed Shangri-La International Hotel Management Ltd
1991 – Kuok Group’s merged with Wilmar International Limited
1991 – Formed Shangri-La Hotels and Resorts, assumed management of the Kowloon from Westin, as well as all hotels it had owned until that point
1993 – Robert Kuok's Kerry Group acquired a 34.9% stake in the South China Morning Post (SCMP) Group
2012 – Received China Economic Person of The Year award
2014 – 113 hotels and resorts which the brand of Shangri-La, Kerry and Traders.

“He is very wise, ambitious and not much talking. He is absolutely someone that is easy to talk to. If we don't agree to his opinion, we definitely will respect his behaviors.” – Tan Sri Ramon Navaratnam


CHARACTERISTICS OF ROBERT KUOK

1. BRAVE
Brave to explore any field of business. He is the first entrepreneur to invest in China hotel’s development. In return, he built one of the largest hotel’s empires in Asia.

2. WORK HARD
During “Never use easy way to success”

3. GOOD ENGLISH COMMAND
During his interview with CCTV “Dialogue”, he claimed that he able to success is because he able to communication well in English. Back to 50s, hardly to find a young Chinese man in London, who able to talk well in English.

4. GOOD WELL-FARE TO EMPLOYEES

5. RISK TAKER


INVOLVEMENT IN INFORMATION TECHNOLOGY

During the CCTV’s interview for a chapter of series “Dialogue”, Robert told the audiences that Information Technology (IT) is a new path of commerce. He said that IT might be something hard for him, but will never be an excuse for him to escape. For example, the used of IT in his business is really needed to keep on up to date.

1. Data management in Shangri-La Hotels and Resorts – backup, disaster recovery, Infasys, Opera Micros, yearly audit and penetration test for data safety.
2. Online application for Kuok foundation, Shangri-La Careers and academy.

In fact, we can’t deny how useful Information Technology is, in helping us developing our business. It makes business no boundaries. But, it could takes business to a new phrase of better or worst. So, these entrepreneurs really need to maximize the usage of ICT in their business, but at the same time they need to manage it well, to avoid from intruders. Thus, the example of complexities of Shangri-La system itself proved that how well the data management was.

Graduates Fear Most - Interview

These are few reasons what employers think is lacking among unemployed graduates. (From Jobstreet.com.my)




Searching for a job and start earning is amust-do cycle in life in order to keep on survive. In my previous experience, i went to, for almost 16 interviews. Some get good feedback (job offer) and nevertheless, some not suite. Above statistic shows that English do pay an important role in employee selection and shortlist from employers.

My tips for interview:
1. Take it as a friend's meeting.
2. Show our confident by eyes contact, body postures and hand movement.
3. Go early, don't be late.
4. Switch off PHONE!
5. Thousand out there are with skills like you, impress them with good human characteristics.

WHY? NOT ONLY EMPLOYEES NEED A JOB, EMPLOYERS NEED US TOO! NEVERTHELESS, never give up!