Attention is given to the impact and use of stock repurchases by firms with negative retained earnings balances.
In analyzing the application software industry, Microsoft was the only company among its principal competitors to report these kinds of negative retained earnings balances. This is despite its high profits.
The company has maintained a negative retained earnings balance since that time.
The retained earnings balance was zero on May 1, 2007.
Dominos has continued to report a negative retained earnings balance for the past 16 years.
As such, the incomes, dividends, and beginning and ending retained earnings balances of both stockholder groups should be reported in the consolidated retained earnings statement.
The consolidated retained earnings statement purports to reflect the earnings, dividends, and beginning and ending retained earnings balances of the consolidated entity.
Similarly, its 31 December 20x8 separate company balance sheet would report a $3,640 retained earnings balance, equal to the $3,100 dividend basis retained earnings of Company P plus $540 or 60 percent of Company S's $900 retained earnings accumulated since acquisition.
(11.) By definition, the dividend basis retained earnings balance of the parent company under the cost method is the starting point for deriving parent company retained earnings under the equity method and consolidated retained earnings under the parent company theory.