...their business operations. When viewing each entity separately, the company stands to gain and grow from selling their stock. The investor stands to gain by investing in a company in hopes that their stock prices will go up and they earn a profit. In truth, both parties depend heavily on one another. The more people invest, the more opportunity the company has to grow. The more leeway for the company to grow, the happier they are able to make their investors, who in turn spend more money. To further understand owner’s equity, paid in capital, earned capital, and earnings per share should be discussed. Paid in Capital vs. Earned Capital Paid in capital is what the business earns by issuance of stock. Paid in capital includes what is paid for capital stock plus any additional paid in capital. Additional paid in capital is money that is paid in addition to the par value of the stock. Generally speaking, paid in capital is money that the company has raised from equity rather than ongoing operations. Earned capital is the money that an organization has generated as a result of operations. Usually, new companies will hold onto this money as retained earnings to use for future growth. Many established companies, though, will pay dividends from earned capital. Paid in capital and earned capital must be kept separate do that investors can decipher between the two. While paid in capital is important to an organization, investors need to be able to see if the company is able to meet...
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...Owner’s Equity Philswifey ACC/423 June 20, 2011 Professor X Owner’s Equituy Owner’s equity is also known as stockholder’s equity, shareholder’s equity, or corporate capital. Capital stock, additional paid-in capital, and retained earnings are the categories that make up stockholder’s equity. Capital stock and additional paid-in capital represent the amount stockholders provided to the corporation for business use. Earned capital is capital developed from business operations and consists of all income not distributed that remains invested in the corporation (Kieso, 2007). Companies keep earned capital and paid-in capital separate because combining the two could misrepresent the earning potential of the business’s operations (Jacobsen & Wachterhauser, 2011). For example, if the chief executive officer of Widgets, Incorporated pays $1,000,000 capital towards business operations, this is known as paid-in capital. If Widgets, Inc. produces 100,000 widgets sold at $10 each for a total of $1,000,000 that is reinvested into the company’s business operations, this is known as earned capital. The company’s financial team should report these two amounts separately on the statements so stakeholders can identify the amounts of money the company generates from operations; therefore, providing an accurate picture of the company’s earning potential. Investors should be more interested in a company’s earned capital instead of paid-in capital. Investors need to be...
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...Owner's Equity Paper Owner's Equity Paper Capital stock refers to both common stock and preferred stock. There are two types of capital paid in capital and earned capital. Paid-in-capital refers to the stocks issued to an investors in exchange for the capital that that the investor is willing to provide to the company. Paid in capital can be referred to as contributed capital which in turn is reported as stockholders’ equity, when a company receives issued shares of stock. Paid-in capital is kept separate from the earned capital in order to avoid any misinterpretation of where the capital comes from. Earned capital referred to as the value of a company’s assets which is accumulated via their money-making operations. This will help to facilitate a clear separation of the operational capital that comes from the profit making operations. The majority of investors will be concerned with the earned capital versus the paid in capital, as the earned capital reflects the earning potential of a company. Owners’ equity is referred to as the vested interest that both common stockholders and preferred stockholders have in a company. Stockholders are the people that have paid-in capital to a company in order to provide funding that is to be used for the operations of a company. It is vital to keep paid-in capital separate from the earned capital of a company. Paid-in capital comes from the sale of capital stock whether it be from the stock markets or in the form of shareholder shares...
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...Owners’ Equity Paper In a corporation, owners’ equity is also known as stockholders’ equity, shareholders’ equity, or corporate capital. Owners’ equity is equal to the amount of net assets (Halliday, 2012). In this sense, the amount of owners’ equity will increase and decrease with profitability and loss, respectively (Kieso, Weygandt, & Warfield, 2010). Owners’ equity typically consists of capital stock, additional paid-in capital, and retained earnings (Kieso, Weygandt, & Warfield, 2010). This analysis will further explain owners’ equity. In particular, the three categories of capital, the importance of keeping paid-in capital separate from earned capital and which is more important to an investor, and whether basic or diluted earnings per share are more important to an investor. Paid-in capital and earned capital are two different types of funding available to an organization and should be kept separate. Paid-in capital consists of both capital stock and additional paid-in capital above the par value of stock, which is provided from the sales of stocks for use by the company (Kieso, Weygandt, & Warfield, 2010). Earned capital or retained earnings, however, is capital earned from the profitable operations of the company and retained for reinvestment (Halliday, 2012). Paid-in capital and earned capital must be kept separate to provide clear information to the users of financial statements. Users are interested in the amount of earned capital as this represents the ability...
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...Contract Formation Author: Jason Dorman Business Law Professor Riggs 11-24-2013 A contract must have certain elements to be considered a contract. However, there are also elements that exist that will negate a contract as well. Fraud, undue influence and duress are all elements that will negate a contract. When a contract is breached or negated one party can collect damages or seek equitable remedies. The common law doctrine of election of remedies prevents individuals from taking advantage of the system. These elements are what an individual would not want to deal in any business situation. There are also elements in place to prevent a party from double recovery and this is called the common law doctrine of election of remedies. What we can learn from contracts is that neither side will deceive the other. What is fraud and how does it affect a contract? Fraud is an intentional act by one party to deceive another. “Fraud prevents a mutual agreement to a contract because one party intentionally deceives another as to the nature and the consequences of a contract.” [legal-dictionary.thefreedictionary.com] When each party involved in the contract states their terms. The terms must be factual and any misrepresentation of the truth can void the contract. However, there are situations where an individual’s intentions are to get over on the other party. This is why it is important to read the contract before signing it. What is undue influence? “Undue...
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...QUESTION “There must be somebody in whose favour the court can decree performance” Discuss the principle enunciated in the above statement and the exceptions thereof with the aid of appropriate case law “There must be somebody in whose favour the court can decree performance” INTRODUCTION In order for a trust to be valid, there needs to be an identifiable beneficiary who can either be an individual or a company . If for instance there is no beneficiary, and consequently the trust is for the achievement of some abstract purpose then the trust is to be considered as void. In the words of Lord Grant MR in the case of Morice v. Bishop of Durham : “There can be no trust, over the exercise of which this court will not assume control... if there can be clear, but for uncertain objects, the property… is indisposed of… Every… [Non-charitable] trust must have a definite object. There must be somebody in whose favour the court can decree performance. The rationale of the principle is to ensure the courts ability to administer the trust. Moreover in the case of Re Endacott it was said, in relation to the beneficiary principle, that ‘no principle has greater sanction and authority’ in the law of trust other that requiring the existence of a beneficiary. It is essential for validity. For instance in the case of Re Astor , a trust for the establishment , maintenance and improvement of good understanding, sympathy, and co-operation between nations was...
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...Mitigation of Damages: In most situations, when a breach of contract occurs, the non-breaching party has a duty to take whatever action is reasonable to minimize the damages caused by the breach. For example, in most instances, people who are fired by their employer, regardless of the reason, have a duty to find a new job. Likewise, a thwarted house buyer has a duty to take reasonable steps to locate another house. Liquidated Damages: Many contracts contain provisions specifying a sum certain of money to be paid by the breaching party in the event that he fails to perform as required by the contract. Generally speaking, the liquidated damages are based on a reasonable estimate of the value of the promised performance. Penalties: By contrast, a penalty provision specifies a sum certain of money, bearing no reasonable relationship to the value of performance, to be paid by the breaching party in the event of default or breach. Penalty provisions are rarely enforceable. EQUITABLE REMEDIES In addition to the various types of money damages, there are several equitable (i.e., non-damage) remedies available. Rescission: Canceling a contract and returning the parties to their pre-contract position. Restitution: Returning goods, property, or money previously transferred in order to restore the non-breaching party to his pre-contract position. Specific Performance: Requiring the breaching party to perform exactly as called for in the contract...
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...Restitution an old concept Restitution v Compensation (most cases) i.e.: remedy of compensation Unjust enrichment has 4 main elements (confirmed in Banque Financiere) **** sets out the structure. i) defendant’s enrichment (money is very clearly a benefit to you) (can spend it, can use it) ii) at the claimant’s expense? (did the money come from the bank?) transfer of value from the C or substraction from C … didn’t lose money, but lost time and expertise i.e.: repairing a table iii) was the enrichment unjust? (unjust factors: i.e.: could be a mistake, failure of consideration benefit has passed, but had failed to provide consideration., exploitation) iv) Are there any valid defences? We don’t want the defendant to suffer as well. The claimant doesn’t necessarily gain back everything. (CHANGE OF POSITION THE DEFENDANT RELIED ON THE ENRICHMENT). Reliance, detrimental reliance, links with estoppel. i.e.: textbook, nightout, books. Instead of buying new textbooks, could have bought 2nd hand. Instead of spending the nightout, could have paid individually. The court only look at the gain you still HAVE. They might take away your books, laptop (require to sell off the laptop) depends on REASONABLENESS /SENSIBILITY. So, i.e.: if you spend on HOLIDAY, on other things, i.e.: spend on nightout dinner, the court cant take back anything! Chase Manhanttan. made 2 payments, only should made 1. After being made, the bank went bankrupt, found a constructive trust...
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...to replace the earlier notion that he should draft a contract, and one month passed. BTT then sent Chou a fax requesting that he send a draft for a distribution agreement contract. Despite the fact that Chou did so immediately after receiving the BTT fax, several more months passed without response from BTT. BTT had a change in management and informed Chou they were not interested in distributing Strat. READ ENTIRE DOCUMENT BELOW (2.1) FOR SUPPORTING EVIDENCE: 2.1 The law provides certain relief for aggrieved parties that suffer losses as a result of another party’s breach of contract. These relief mechanisms are collectively referred to as remedies. Recall the distinction discussed in Chapter 1 between remedies at law and remedies in equity. For many contracts, the remedy at law...
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...According to Cheeseman (2013), an occurrence of fraud happens when a person knowingly decides to have someone rely or behave in false representation. In certain situations, legally binding agreements, such as contracts, may become invalidated for multiple reasons. For instance, lack of capacity (Unenforceable Contracts, n.d.) may nullify a contract if at least one party is underage, or doesn’t quite have the mental capacity needed to thoroughly understand what the agreement consisted of. This would not allow a dishonest person to take advantage of a person who is mentally unable to make a rational decision. Invalidation of a contract also includes duress. This occurs when someone is coerced or threatened into an agreement (Unenforceable Contracts, n.d.). My brother is a truck driver so I will use him as an example. Let’s pretend he agreed to haul a load of materials for the upcoming project of a private company. My brother contacted the company and told them he would not complete the delivery unless they paid him more money. The company would probably feel like they are being forced to pay the inflated price because they wouldn’t be able to complete their project without these materials; therefore losing revenue. This type of action could also be described as blackmail. An example of undue influence would be if a manager and subordinate were in a romantic relationship and the manager used that relationship to hang over the other’s head in order to take advantage of the situation...
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...400 Week 4 DQ 1 ACC 400 Week 4 DQ 2 ACC 400 Week 4 DQ 3 ACC 400 Week 4 LTA Interpreting Financial Statements Report ACC 400 Week 4 Power Point Presentation ACC 400 Week 5 Assignments BYP13-7 23.10 and 23.12 ACC 400 Week 5 DQ 1 ACC 400 Week 5 DQ 2 ACC 400 Week 5 Final Exam ACC 400 Week 5 Individual Assignment Debt versus Equity Financing Paper ACC 400 ENTIRE COURSE ACC 400 Week 1 DQ 1 ACC 400 Week 1 DQ 2 ACC 400 Week 1 DQ 3 ACC 400 Week 1 Individual Current and Noncurrent Asset Paper ACC 400 Week 2 DQ 1 ACC 400 Week 2 DQ 2 ACC 400 Week 2 DQ 3 ACC 400 Week 2 Individual Questions from the readings ACC 400 Week 2 LTA Assignments from Readings ACC 400 Week 3 DQ 1 ACC 400 Week 3 DQ 2 Horizontal Analysis ACC 400 Week 3 Individual Assignments from Readings ACC 400 Week 3 Learning Team Assignment E11-1 ACC 400 Week 4 DQ 1 ACC 400 Week 4 DQ 2 ACC 400 Week 4 DQ 3 ACC 400 Week 4 LTA Interpreting Financial Statements Report ACC 400 Week 4 Power Point Presentation ACC 400 Week 5 Assignments BYP13-7 23.10 and 23.12 ACC 400 Week 5 DQ 1 ACC 400 Week 5 DQ 2 ACC 400 Week 5 Final Exam ACC 400 Week 5 Individual Assignment Debt versus Equity Financing...
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...The personal liability of third parties for having received or dealt with trust rights or their traceable substitutes which they received in breach of trust is known as recipient liability. Knowing receipt arises where the recipient has some degree of knowledge that the property was received in breach of the trust or following receipt acquired some degree of knowledge that the rights were trust rights and dealth with them as his/her own instead of returning them to the trust. In Re Montagu’s Settlement Trusts (1987) Megarry J held that in order to found a claim for knowing receipt, the defendant had to have actual knowledge that his receipt was in breach of trust or was ‘willfully blind’ shutting his eyes to the obvious; or willfully and recklessly failed to make the inquiries that an honest or reasonable persons would make. However, a person was not liable for knowledge he might have once had, but had honestly and genuinely forgotten when the breach had occurred. Following this was the judgment in BCCI v Ackindele (2000). In this case Nourse J opined that just as Royal Brunei had cleared away the tangled case law of the past to establish from the first, principles the basis on which a person could be liable for assisting a breach of trust, the court could do the same for the law on recipient liability. He held that a defendant would be personally liable only if it would be ‘unconscionable’ for him to retain the benefit of that receipt of trust property. The court recognized...
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...Remedies: Breach of Contract Introduction There are various remedies available to an innocent party where there has been a breach of contract. The main remedy is damages, but in certain situations, equitable remedies are available. 1. Unliquidated Damages Unliquidated damages are assessed by the court and are designed to compensate the innocent party for any losses incurred as a result of a breach of contract. However, where loss can not be proved, the innocent party will only be entitled to claim nominal damages. In the case of Surrey CC v Bredero Homes (1993), damages were not awarded defendant who had failed to comply with planning permission because the council had not suffered any loss. This can be contrasted with the case of Chaplin v Hicks (1911) where the court awarded damages to the claimant for the loss of a chance to win a competition. Unliquidated damages are not a means by which to punish the defendant and punitive damages will not be awarded for a breach of contract. They are also not a way to recover any gain made by the defendant as a result of a breach. Loss includes any harm or damage to the claimant themselves or any of their property, including any reduction of value of such property caused by the breach of contract. However, in calculating the loss and awarding damages, if the claimant has obtained any benefit from the breach the court will not usually allow the claimant to be put in a better position than they would have been had the breach not occurred...
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...Result Update November 14, 2011 Rating matrix Rating Target Target Period Potential Upside : : : : Buy | 32 24 months 29% GMR Infrastructure (GMRINF) | 25 WHAT’S CHANGED… PRICE TARGET........................................................................... Changed from | 35 to | 32 FY12E 7652.8 1820.4 -178.9 FY13E 9689.6 2807.6 168.5 Key Financials (| Crore) Net Sales EBITDA Adj Net Profit FY10 4566.5 1364.3 158.4 FY11 5773.8 1555.5 -131.0 EPS (FY12E).............................................................................. Changed from |0.1 to |-0.5 EPS (FY13E)........................................................................................................Unchanged RATING...............................................................................................................Unchanged Net losses lower than expected… GMR Infrastructure’s (GMR) Q2FY12 net losses were lower than expected largely on account of better-than-expected revenues and margin in the other segment (investment income, project management fees & charter rental income). During the quarter, GMR agreed to sell a 30% stake in GMR Energy (Singapore) implying deal value of ~S$50 million and contributing |1.7/share in our SOTP valuation. We maintain BUY. Q2FY12 losses lower than expected… GMR’s net sales grew 48.3% in Q2FY12 mainly on account of consolidation of the Male Airport (| 225 crore). The net losses came lower at | 62.5 crore vs. our expectation of | 91.1 crore largely...
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...USIU BUS 3010 BUSINESS LAW EQUITY The Maxims of Equity Maxims of Equity— As we have seen in the last chapters, the Courts of Chancery were governed by the principles of Equity. The Equity, again we have seen earlier, is not a single system of law bat a collection of appendices, But the principle of Equity which were followed by the Court of Chancery, while giving equitable reliefs, were not arbitrary. On the other -hand they were based upon those principles of right and obligation which have Juridical relation with aid application to the events aid transactions of society. Many of these general principles constituting the ultimate sources of equitable doctrines are enbodied in its twelve mixims of Equity. - . According to Salmond, “Maxims are proverbs of the law and provide useful means for the expression of leading doctrines of the law in form which is brief and intelligible. According to Prof. Hanbury, “They are the fruit of observation of developed doctrine and the ideas embodied in them are far older than their articulate expression.” The twelve Maxims of Equity which embodied the principles of Equity justice are as under: 1) Equity will not suffer a wrong without a remedy. 2) Equity follows the law. 3) Where equities are Equal, the law shall prevail. 4) Where the Equities are equal, the first in time shall prevail. 5) He who seeks Equity must do Equity. 6) He why comes to Equity, must come with clean hands or He that hath...
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