Professional Documents
Culture Documents
Session 8-9
Week 4 Learning Goals
• Prepare Balance Sheet
• Understand and compute following items:
– Total Assets
– Property, Plant, & Equipment (net)
– Receivables net of Allowance for Doubtful Debt
– Financial Assets (Current)
– Current Assets & Liabilities, Net Working Capital
– Total Liabilities
– Financial Liabilities (Current & Non-current)
– Total Borrowings (Short-term Borrowings, Current Maturities of Long-term
Borrowings, Long-term Borrowings, Preference Share Capital)
– Total Equity (Equity Share Capital, Other Equity, Reserves, Equity Shares,
Bonus Shares, Stock Split and Equity Share Buyback)
– Capital Employed
• Understand B/S (changes in assets financed by changes in liabilities
and net worth) of chosen companies: Hindalco & Infosys.
Chap 2 E2 – 5 – Donavan Co.
Chap 2 E2 – 8 – Barfield Corp.
Chap 2 P2-3A – Ramirez Enterprises
Chap 3 P3-3A – Cindy Braun
Cindy Braun continues
Balance Sheet
• Sources of Funds
– Shareholder’s Funds
• Share Capital-
– authorized, Issued, subscribed & paid up
– bonus shares, stock split, Shares issued on mergers,
Cancellation of shares (Share buy back)
• Reserves & Surplus- capital vs. revenue
reserve, general reserve
• Deferred tax liabilities
– Loan Funds
• Secured loans
• Unsecured loans
Different equity related terms in an Indian
B/S
• Authorized Capital
• Issued Capital
• Subscribed & Paid up Capital
July 15: MIU Corporation’s 15,000 shares of $5 par value stock issued
and outstanding were split 2 for 1.
# of Shares Outstanding ↑ ↓ ↑ ↑ ↓
1–28
1–29
Infosys
1–30
1–31
Balance Sheet Contents
Current Assets
• Assets that a company expects to convert to cash or
use up within one year or the operating cycle,
whichever is longer.
Current Assets
Illustration 2-3
In the U.S., companies list current asset accounts in the order they
expect to convert them into cash.
Current Assets - India
Current Assets
1–36
1–37
1–38
The Classified Balance Sheet: US
Long-Term Investments
• Investments in stocks and bonds of other companies that
are held for more than one year.
1–47
The Classified Balance Sheet: US
Intangible Assets
• Assets that do not have physical substance.
Illustration 2-6
1–49
The Classified Balance Sheet
Current Liabilities
• Obligations the company is to pay within the coming year.
Current Liabilities
Illustration 2-7
The Classified Balance Sheet: India
Current Liabilities
The Classified Balance Sheet: US
Long-Term Liabilities
• Obligations a company expects to pay after one year.
Illustration 2-8
The Classified Balance Sheet: India
Long-Term Liabilities
The Classified Balance Sheet: US
Stockholders’ Equity
Illustration 2-2
1–61
Classified Balance Sheet
• Cash
• Temporary investments
• Accounts receivable
• Inventory
• Prepaid expenses
• Also called
– Operating assets
– Fixed assets
– Tangible assets
– Long-lived assets
– Plant assets
• The costs of these assets are depreciated
– Spread over the periods they benefit
• Past depreciation is recorded in the
Accumulated Depreciation accounts
Copyright © Cengage Learning. All rights reserved. 4-68
Examples of Intangible Assets
• Patents
• Copyrights
• Goodwill
• Franchises
• Trademarks