He gets what is left after paying debts and settling with preferred shareholders.Możliwość komentowania He gets what is left after paying debts and settling with preferred shareholders. została wyłączona
He gets what is left after paying debts and settling with preferred shareholders.
If the borrower is unable to repay the loan and interest on the loan, the bank decides to sell the mortgaged property through an auction (public bidding). These operations are displayed by the following postings:
debit of accounts # 1200, 3900 and credit of account # 2909 "Other accounts payable for transactions with the bank’s clients" – in the amount of revenue received from the sale of property; debit of account No. 2909 and credit of accounts No. 2217, 2291 – the amount of debt on the loan is repaid; debit of account # 2219 and credit of account # 6043 – interest is accrued.
At the same time accounting entries are made on off-balance sheet accounts:
debit of accounts №9500, 9501 and credit of account №9900 – the value of the mortgaged property is written off; debit of account №9910 and credit of account №9819 – insurance contract (policy) and credit agreement are written off; debit of account # 9031 and credit of account # 9 900 – the amount specified in the surety agreement is debited; debit of account №9910 and credit of account №9601 "Unpaid income of clients" – the amount of unpaid interest is written off.
If the amount of the bank’s claims secured by this pledge is received during the sale of the collateral, the difference is returned by the bank to the mortgagor. The following postings are made:
debit of account No. 2909 and credit of account No. 1001 – for the amount paid in cash; debit of account # 2909 and credit of account # 2620 – for the amount credited to the deposit.
Economic content of securities. Abstract
Securities, being actual capital, have no real value, their price or exchange rate is regularly determined by income in the form of dividends on shares or interest on bonds, as well as loan interest. The exchange rate of securities fluctuates and at any time depends on the ratio between the supply of these securities and demand for them
For operations on stock exchanges, special securities that constitute stock values are allowed.
There are different types of stock values: fixed income securities (also called debt obligations); shares – a certificate of participation in the capital. There are also their mixed forms.
Securities, being actual capital, have no real value, their price or exchange rate is regularly determined by income in the form of dividends on shares or interest on bonds, as well as loan interest. The stock exchange rate of securities fluctuates and at any time depends on the ratio between the supply of these securities and the demand for them. Through the stock exchange is the placement of shares, bonds, which is carried out mainly by large banks.
Fixed income securities are debt obligations in which the issuer undertakes to take appropriate action. As a rule, this is a refund of the amount received and interest, which is set once a year or every six months. Along with the name "hard-interest securities" is also used the concept of "rental securities", ie those that bring a fixed income, rent. Receiving a loan involves providing a large amount of money "for a long period. This loan cannot be revoked early by the lender.
There are the following types of fixed income securities:
Government loan (loan). This includes a government loan to create special funds. Utility loan. It is designed to balance public finances of local authorities. The issue of such securities must be authorized by the central or land (local) government, but the latter are not required to provide loan guarantees. Utility bonds are quoted on the stock exchange, ie they are traded. In addition to loans, local authorities can obtain loans from special mortgage (land) banks. Utility bonds and mortgage bonds. Mortgage banks provide long-term loans secured by land plots or debt obligations of companies. The difference between a mortgage and a utility loan (loan) – in the form of their coverage. The issue of mortgage letters is refinanced by the relevant mortgage loans. Utility bonds do not have mortgage coverage. Industrial bonds. These are fixed-income debt obligations of an industrial company. They are issued by large joint-stock companies and limited liability companies. The relative attractiveness of fixed-income industrial bonds is that, unlike stocks, they can be sold at a rate below their face value. This discount is called disagio. In addition, it can be agreed that the redemption of bonds will be carried out not at face value, but at a higher rate. So there is a surcharge – agio, which at the appropriate term of the bond gives additional income.
Industrial bonds are not without drawbacks. A fixed interest rate on industrial bonds means an increase in fixed costs for the firm. In times of crisis, such costs are particularly significant for companies, in contrast to dividends, which, depending on income, may be set at a lower level.
Conversion bonds and option loans are somewhat similar to industrial bonds. These are transitional forms of fixed income securities. Their issuance is regulated by the relevant national laws on joint-stock business. Both the first and the second security have a fixed interest rate. The difference between these securities and industrial bonds is that their purchase involves the ability to buy shares in the future. In the case of conversion debt obligations, the creditor is given the right to exchange these securities after a specified period and subject to payment of agio in the appropriate proportion for shares of this company.
Option loans and conversion obligations, as well as industrial bonds, are listed on the stock exchange, their rate is published daily. A promissory note is a security that certifies an unconditional commitment of the issuer. There is a promissory note and a bill of exchange. Each of them has the appropriate details. A promissory note in which any of the details is missing is not valid, except as provided. The procedure for redemption and accounting of promissory notes is determined by the Cabinet of Ministers.
Promotions and their types. Shares are numbered securities, documents confirming membership in a joint-stock company and giving the right to receive a dividend. Most often in developed countries they are nominal. Each share agreement must be registered by a joint stock company or bank on its behalf. The issue of bearer shares is limited in all countries. The shares are printed by a narrow range of orders. As a rule, shares are kept by brokers or other specialized offices.
The owner had only a certificate of the number of shares. The number of shares issued by the company is strictly fixed, narrative and descriptive essay topics and each new issue must be approved by its directors or shareholders' meeting. The registered nature of the share allows companies to always know who its shareholders are, to which address to send the notice of the shareholders' meeting, the account number to which to transfer dividends. A joint-stock company may issue one type of shares with the same rights, as well as several types of shares with different statuses.
There are ordinary and preferred shares. Ordinary shares give their owner the right to one vote at the shareholders' meeting. In addition, the holder of an ordinary share is entitled to receive a part of the net profit, which is distributed in the form of dividends. Upon liquidation of a joint-stock company, its claim to property is the last. He gets what is left after paying debts and settling with preferred shareholders.
Preference shares give the owner the right to preferential encroachment on the profits and property of the company, sometimes guaranteeing a fixed income (if the company received a net profit), as well as special voting rights (several votes, the right to participate in decisions at the meeting shareholders).
The most common preferred shares with a fixed income, but without the right to vote. Payment of dividends on these shares is not mandatory for the company, its delay or non-payment does not lead to bankruptcy.
When there is a need for equity, preferred shares can be considered as an acceptable alternative to ordinary shares. Having a fixed dividend can serve as an additional incentive to accumulate funds, albeit at a higher price than when using bonds. At the same time, this avoids restricting the voting rights of ordinary shareholders. When the prices of ordinary shares are low and capital is needed, it can be raised through preferred shares, because convertibility allows them to be converted into ordinary shares, which are convertible when their prices rise.
The issue of preferred shares is limited by law. Thus, for their release in Germany it is necessary to obtain a special permit from the central authorities. In France, only French citizens and members of the EEC may hold shares entitled to two votes.
An investment certificate is a share (participation) in a special securities fund (investment fund) managed by an investment company. The investment certificate cannot be attributed to either interest-bearing securities or shares, although it pays the appropriate income. An investment fund can be compiled on different principles: it can include only shares of large companies or only bonds.
The main purpose of forming such a fund is to minimize the exchange rate dividend and, accordingly, interest rate risks on the basis of a wide differentiation of investments and payment of maximum income to holders of investment certificates. Investment certificates are admitted to the stock exchange only in not many countries, their prices are constantly changing due to fluctuations in stock prices and bonds included in the investment fund. The fund’s investment policy is aimed at reducing risk as much as possible in these economic conditions and maintaining a consistently high level of returns. One of the elements of risk minimization is the widest possible diversification of the acquisition of shares in order to reduce the crisis fluctuations in their prices.