Statement Of Stockholders Equity Example

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The Statement of Stockholders Equity Example, also known as a Claim of the Board of Directors, is the document that describes the owners’ claim on all unvested shares. Owners must have a copy of this document at all times be able to defend themselves against any claims of reverse osmosis or the stockholder’s rights.

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CHAPTER 6 STATEMENT OF CASH FLOWS from statement of stockholders equity example , source:slideshare.net

There are three types of ownership. The first is the direct ownership of shares. This means that the owner controls several shares and has total control over the number of shares he or she owns. This type of ownership allows the shareholder to make all major decisions for the business without question.

The second type of ownership is that of an indirect owner. In this case, the shareholder may own a limited number of shares but indirectly, through voting or investment in other companies.

Analyzing a Balance Sheet Johnson and Johnson Sample 572bf1e43df78c038e5d53f8
Investing Lesson Analyzing a Balance Sheet from statement of stockholders equity example , source:thebalance.com

The third type of ownership is that of a nominee. This is an owner who has no real share of the business but who acts as a proxy for the owner. In other words, this person makes decisions on behalf of the owner in cases of a tie.

The Statement of Stockholders Equity Example states that when two or more persons share equal ownership in a business, then each of these people has a direct or indirect share of that business. However, when one person controls more than 50% of the shares, then the person with the highest percentage is the holder of the actual controlling interest. This creates what is called a “rump corporation” which operates as a separate entity from the rest of the company and does not make decisions as a board of directors.

Review Problem 12 7
Using the Indirect Method to Prepare the Statement of Cash Flows from statement of stockholders equity example , source:courses.lumenlearning.com

Direct owners can never sell shares of stock to other shareholders, except at their discretion. Nominees can do this but must follow any advice given by the owners or by the directors.

The Statement of Stockholders Equity Example explains that the direct owner is the owner of all stock, while nominees are permitted to sell shares of stock to others as they see fit. Directors are responsible for deciding how the shares will be divided among those who hold them. They are the ultimate power to the management of the business. Nominees are allowed to make decisions, but they cannot act on behalf of the owners.

Review Problem 12 4
Using the Indirect Method to Prepare the Statement of Cash Flows from statement of stockholders equity example , source:courses.lumenlearning.com