{"id":337,"date":"2024-09-06T16:48:50","date_gmt":"2024-09-06T16:48:50","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/balance-sheet-presentation\/"},"modified":"2024-09-11T19:54:53","modified_gmt":"2024-09-11T19:54:53","slug":"balance-sheet-presentation","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/balance-sheet-presentation\/","title":{"raw":"Balance Sheet Presentation","rendered":"Balance Sheet Presentation"},"content":{"raw":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\r\n<ul>\r\n \t<li>Illustrate the balance sheet presentation of stockholder's equity<\/li>\r\n<\/ul>\r\n<\/section>&nbsp;\r\n\r\nLet's take another look at the most current <a href=\"https:\/\/ir.homedepot.com\/financial-reports\/annual-reports\/recent\" target=\"_blank\" rel=\"noopener\">regulatory reports for The Home Depot, Inc<\/a>. On page 33 of the 2019 annual report, the company reported the following components of stockholders\u2019 equity:\r\n<table class=\"fin-table acctstatement\"><caption>THE HOME DEPOT INC.\r\nCONSOLIDATED BALANCE SHEET<\/caption>\r\n<thead>\r\n<tr>\r\n<th><em>in millions, except per share data<\/em><\/th>\r\n<th>February 2, 2020<\/th>\r\n<th>February 3, 2019<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>Common stock, par value $0.05; authorized 10,000 shares; issued: 1,786 shares at February 2, 2020 and 1,782 shares at February 3, 2019; Outstanding: 1,077 shares at February 2, 2020 and 1,105 shares at February 3, 2019<\/td>\r\n<td class=\"r\">89<\/td>\r\n<td class=\"r\">89<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Paid-in capital<\/td>\r\n<td class=\"r\">11,001<\/td>\r\n<td class=\"r\">10,578<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Retained earnings<\/td>\r\n<td class=\"r\">51,729<\/td>\r\n<td class=\"r\">46,423<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Accumulated other comprehensive loss<\/td>\r\n<td class=\"r\">(739)<\/td>\r\n<td class=\"r\">(772)<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Treasury stock, at cost, 709 shares at February 2, 2020 and 677 shares at February 3,2019<\/td>\r\n<td class=\"r\">(65,196)<\/td>\r\n<td class=\"r\">(58,196)<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total stockholders' (deficit) equity<\/td>\r\n<td class=\"r line-single line\"><span class=\"u-sr-only\">Single line<\/span>\r\n(3,116)<\/td>\r\n<td class=\"r line-single line\"><span class=\"u-sr-only\">Single line<\/span>\r\n(1,878)<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total liabilities and stockholders' equity<\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span>\r\n$\u00a0\u00a0\u00a0\u00a0\u00a051,236\r\n<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span>\r\n$\u00a0\u00a0\u00a0\u00a0\u00a044,003\r\n<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"3\"><span class=\"u-sr-only\">Note <\/span><em>See accompanying notes to consolidated financial statements<\/em><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nLet\u2019s take a look at a side-by-side comparison of a sole proprietorship\u2019s owner\u2019s equity and that of a corporation:\r\n<div align=\"left\">\r\n<table>\r\n<tbody>\r\n<tr>\r\n<th scope=\"col\">Sole Proprietorship<\/th>\r\n<th scope=\"col\">Corporation<\/th>\r\n<\/tr>\r\n<tr>\r\n<td rowspan=\"2\">Capital contributions<\/td>\r\n<td>Common stock, at par<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Paid-in capital<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Net income less owner withdrawals<\/td>\r\n<td>Retained earnings<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td>Accumulated other comprehensive gain\/loss<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td>Treasury stock<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nIt\u2019s unlikely a sole proprietorship will be following all aspects of GAAP. It would be unlikely to include Other Comprehensive Gains and Losses unless a bank or other influential stakeholder[footnote]A <strong>stakeholder<\/strong> is different from a shareholder or stockholder. Employees, creditors, customers, government agencies, and a wide variety of other interested parties can be stakeholders. This means they have some kind of stake in the company and what it does (for instance, a not-for-profit concerned with the environment could be a stakeholder in a manufacturing firm). A shareholder\/stockholder is an owner because they hold shares of stock.[\/footnote] required full GAAP compliance. Other comprehensive gains and losses usually arise from changes in market value of short-term investments and adjustments that arise in translating information from subsidiaries that do business in other nations and therefore use other currencies (foreign currency translation).\r\n\r\nIn short, other than some differences in terminology and technical differences, the basic expanded version of the accounting equation still holds true:\r\n<p style=\"padding-left: 30px;\">A = L + E, where E = capital contributions \u2212 withdrawals + revenue \u2212 expenses.<\/p>\r\nFor a corporation, it could be listed as:\r\n<p style=\"padding-left: 30px;\">Equity = paid-in capital from the sale of stock (par and in excess of par)\u00a0\u2212 dividends and treasury stock + revenues and other comprehensive income \u2212 expenses and other comprehensive losses.<\/p>\r\nOne final note: The balance in retained earnings is generally available for dividend declarations. Some companies state this fact. In some circumstances, however, there may be <strong>retained earnings restrictions<\/strong>. These make a portion of the balance currently unavailable for dividends. Restrictions result from one or more of these causes: legal, contractual, or voluntary. For instance, a contractual restriction may be the result of loan covenants. A voluntary restriction may be because of a board resolution. A legal restriction may be imposed as part of a lawsuit settlement. Companies generally disclose retained earnings restrictions in the notes to the financial statements.\r\n\r\nIn the next section, we\u2019ll study the Statement of Changes in Stockholders\u2019 Equity, but first, check your understanding of the balance sheet presentation.\r\n\r\n<section class=\"textbox tryIt\" aria-label=\"Try It\">[ohm2_question hide_question_numbers=1]25229[\/ohm2_question]<\/section>","rendered":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\n<ul>\n<li>Illustrate the balance sheet presentation of stockholder&#8217;s equity<\/li>\n<\/ul>\n<\/section>\n<p>&nbsp;<\/p>\n<p>Let&#8217;s take another look at the most current <a href=\"https:\/\/ir.homedepot.com\/financial-reports\/annual-reports\/recent\" target=\"_blank\" rel=\"noopener\">regulatory reports for The Home Depot, Inc<\/a>. On page 33 of the 2019 annual report, the company reported the following components of stockholders\u2019 equity:<\/p>\n<table class=\"fin-table acctstatement\">\n<caption>THE HOME DEPOT INC.<br \/>\nCONSOLIDATED BALANCE SHEET<\/caption>\n<thead>\n<tr>\n<th><em>in millions, except per share data<\/em><\/th>\n<th>February 2, 2020<\/th>\n<th>February 3, 2019<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Common stock, par value $0.05; authorized 10,000 shares; issued: 1,786 shares at February 2, 2020 and 1,782 shares at February 3, 2019; Outstanding: 1,077 shares at February 2, 2020 and 1,105 shares at February 3, 2019<\/td>\n<td class=\"r\">89<\/td>\n<td class=\"r\">89<\/td>\n<\/tr>\n<tr>\n<td>Paid-in capital<\/td>\n<td class=\"r\">11,001<\/td>\n<td class=\"r\">10,578<\/td>\n<\/tr>\n<tr>\n<td>Retained earnings<\/td>\n<td class=\"r\">51,729<\/td>\n<td class=\"r\">46,423<\/td>\n<\/tr>\n<tr>\n<td>Accumulated other comprehensive loss<\/td>\n<td class=\"r\">(739)<\/td>\n<td class=\"r\">(772)<\/td>\n<\/tr>\n<tr>\n<td>Treasury stock, at cost, 709 shares at February 2, 2020 and 677 shares at February 3,2019<\/td>\n<td class=\"r\">(65,196)<\/td>\n<td class=\"r\">(58,196)<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total stockholders&#8217; (deficit) equity<\/td>\n<td class=\"r line-single line\"><span class=\"u-sr-only\">Single line<\/span><br \/>\n(3,116)<\/td>\n<td class=\"r line-single line\"><span class=\"u-sr-only\">Single line<\/span><br \/>\n(1,878)<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total liabilities and stockholders&#8217; equity<\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span><br \/>\n$\u00a0\u00a0\u00a0\u00a0\u00a051,236<br \/>\n<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span><br \/>\n$\u00a0\u00a0\u00a0\u00a0\u00a044,003<br \/>\n<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td colspan=\"3\"><span class=\"u-sr-only\">Note <\/span><em>See accompanying notes to consolidated financial statements<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Let\u2019s take a look at a side-by-side comparison of a sole proprietorship\u2019s owner\u2019s equity and that of a corporation:<\/p>\n<div style=\"text-align: left;\">\n<table>\n<tbody>\n<tr>\n<th scope=\"col\">Sole Proprietorship<\/th>\n<th scope=\"col\">Corporation<\/th>\n<\/tr>\n<tr>\n<td rowspan=\"2\">Capital contributions<\/td>\n<td>Common stock, at par<\/td>\n<\/tr>\n<tr>\n<td>Paid-in capital<\/td>\n<\/tr>\n<tr>\n<td>Net income less owner withdrawals<\/td>\n<td>Retained earnings<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td>Accumulated other comprehensive gain\/loss<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td>Treasury stock<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>It\u2019s unlikely a sole proprietorship will be following all aspects of GAAP. It would be unlikely to include Other Comprehensive Gains and Losses unless a bank or other influential stakeholder<a class=\"footnote\" title=\"A stakeholder is different from a shareholder or stockholder. Employees, creditors, customers, government agencies, and a wide variety of other interested parties can be stakeholders. This means they have some kind of stake in the company and what it does (for instance, a not-for-profit concerned with the environment could be a stakeholder in a manufacturing firm). A shareholder\/stockholder is an owner because they hold shares of stock.\" id=\"return-footnote-337-1\" href=\"#footnote-337-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a> required full GAAP compliance. Other comprehensive gains and losses usually arise from changes in market value of short-term investments and adjustments that arise in translating information from subsidiaries that do business in other nations and therefore use other currencies (foreign currency translation).<\/p>\n<p>In short, other than some differences in terminology and technical differences, the basic expanded version of the accounting equation still holds true:<\/p>\n<p style=\"padding-left: 30px;\">A = L + E, where E = capital contributions \u2212 withdrawals + revenue \u2212 expenses.<\/p>\n<p>For a corporation, it could be listed as:<\/p>\n<p style=\"padding-left: 30px;\">Equity = paid-in capital from the sale of stock (par and in excess of par)\u00a0\u2212 dividends and treasury stock + revenues and other comprehensive income \u2212 expenses and other comprehensive losses.<\/p>\n<p>One final note: The balance in retained earnings is generally available for dividend declarations. Some companies state this fact. In some circumstances, however, there may be <strong>retained earnings restrictions<\/strong>. These make a portion of the balance currently unavailable for dividends. Restrictions result from one or more of these causes: legal, contractual, or voluntary. For instance, a contractual restriction may be the result of loan covenants. A voluntary restriction may be because of a board resolution. A legal restriction may be imposed as part of a lawsuit settlement. Companies generally disclose retained earnings restrictions in the notes to the financial statements.<\/p>\n<p>In the next section, we\u2019ll study the Statement of Changes in Stockholders\u2019 Equity, but first, check your understanding of the balance sheet presentation.<\/p>\n<section class=\"textbox tryIt\" aria-label=\"Try It\"><iframe loading=\"lazy\" id=\"ohm25229\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=25229&theme=lumen&iframe_resize_id=ohm25229&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n<hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-337-1\">A <strong>stakeholder<\/strong> is different from a shareholder or stockholder. Employees, creditors, customers, government agencies, and a wide variety of other interested parties can be stakeholders. This means they have some kind of stake in the company and what it does (for instance, a not-for-profit concerned with the environment could be a stakeholder in a manufacturing firm). A shareholder\/stockholder is an owner because they hold shares of stock. <a href=\"#return-footnote-337-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":6,"menu_order":16,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Balance Sheet Presentation\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":321,"module-header":"- Select Header -","content_attributions":[{"type":"original","description":"Balance Sheet Presentation","author":"Joseph Cooke","organization":"Lumen Learning","url":"","project":"","license":"cc-by","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/337"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/users\/6"}],"version-history":[{"count":3,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/337\/revisions"}],"predecessor-version":[{"id":957,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/337\/revisions\/957"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/parts\/321"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/337\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/media?parent=337"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=337"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/contributor?post=337"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/license?post=337"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}