Shareholder's Equity

Ch. 18: Shareholders’ Equity

What is Shareholders’ Equity?

Accounts that represent the ownership interests of shareholders.

Shareholders’ Equity = Assets - Liabilities

Amount left over after creditor claims have been satisfied (like homeowners equity)

Shareholders’ Equity appears two places within the financial statements:

1.) Shareholder’s Equity section of the balance sheet

Example 1: Abbreviated Balance Sheet – The Gap, Inc.

THE GAP, INC.
CONSOLIDATED BALANCE SHEETS

($ and shares in millions except par value) February 2,
2013

January 28,
2012
ASSETS

Current assets:

Total current assets 4,132

4,309

Property and equipment, net 2,619

2,523

Other long-term assets 719

590

Total assets $
7,470

$
7,422

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Total current liabilities 2,344

2,128

Long-term liabilities:

Total long-term liabilities 2,232

2,539

Stockholders' equity:

Common stock $0.05 par value

Authorized 2,300 shares and Issued 1,106 shares for all periods presented; Outstanding 463 and 485 shares 55

55

Additional paid-in capital 2,864

2,867

Retained earnings 13,259

12,364

Accumulated other comprehensive income 181

229

Treasury stock at cost (643 and 621 shares) (13,465
)

(12,760
)
Total stockholders' equity 2,894

2,755

Total liabilities and stockholders' equity $
7,470

$
7,422

2.) Statement of Shareholder’s Equity

Example 2: Abbreviated Statement of Stockholders’ Equity – The Gap, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Additional
Paid-in
Capital Retained
Earnings

Accumulated
Other
Comprehensive