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Re: oilspec post# 335515

Thursday, 06/16/2011 6:53:37 AM

Thursday, June 16, 2011 6:53:37 AM

Post# of 346917
I guess you weren't able to find anything?
"Show me the Balance Sheet of a reporting US company that:
1. reports ownership of its own shares as an Asset and
2. has a category in its Liabilities section called "Outside" Liabilities (with or without your quotation marks)
and I will "go back and brush up" on my basic accounting.

You may use 2 different companies in your answer."

You'll be happy to hear that this is my last post on this subject. The subject being whether the issuance of common stock by a company increases its net worth under US accounting standards. The subject has absolutely nothing to do with houses or taxes or whether the issuance of shares results in income (it does not and I don't know who suggested that it did).

My rusty basic accounting calls for the following entry upon the sale of shares by a company:
A debit to the asset known as Cash and a credit to an account (in all likelihood two accounts, allocating the par value and the "Additional Paid in Capital") in the Shareholders Equity section. (As a reminder, a debit is an increase to an asset account and a credit to an equity account is also an increase.)
Note that the above credit IS NOT to an asset account (the value of shares is not an asset account in the country from which this post originates), and it IS NOT a credit to a liability account (I have no idea what country treats it that way, but it ain't the US of A). Read carefully: The credit is to an account or accounts in the Shareholders Equity Section. The terms Shareholders Equity and Net Worth are interchangeable:

"What Does Shareholders' Equity Mean?
A firm's total assets minus its total liabilities.
Also known as "share capital", "net worth" or "stockholders' equity".
http://www.investopedia.com/terms/s/shareholdersequity.asp

Net worth: Net worth (sometimes "net assets") is the total assets minus total liabilities of an individual or company. For a company, this is called shareholders' equity or net assets.
http://www.websters-online-dictionary.org/definitions/net+worth?cx=partner-pub-0939450753529744%3Av0qd01-tdlq&cof=FORID%3A9&ie=UTF-8&q=net+worth&sa=Search#994

Shareholders’ equity is sometimes called capital or net worth. It’s the money that would be left if a company sold all of its assets and paid off all of its liabilities.
http://www.sec.gov/investor/pubs/begfinstmtguide.htm


So, to sum up, the issuance of shares for cash by a company increases its Net Worth.

You guys are on your own.

I'm tryin ta think but nuttin happens......Curly

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