Treasury shares were acquired for cash at a price above par value. The treasury shares were subsequently reissued for cash at a price above its acquisition price. If the cost method of accounting for treasury share transactions is used, what is the effect on total retained earnings during (1) Acquisition of Treasury Shares, and (2) Reissuance of Treasury Shares? a) (1) No effect, (2) Increase b) (1) No effect, (2) No effect c) (1) Increase, (2) Decrease d) (1) Decrease, (2) Increase

Treasury shares were acquired for cash at a price above par value. The treasury shares were subsequently reissued for cash at a price above its acquisition price. If the cost method of accounting for treasury share transactions is used, what is the effect on total retained earnings during (1) Acquisition of Treasury Shares, and (2) Reissuance of Treasury Shares? a) (1) No effect, (2) Increase b) (1) No effect, (2) No effect c) (1) Increase, (2) Decrease d) (1) Decrease, (2) Increase

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 10C: Treasury Stock For numerous reasons, a corporation may reacquire shares of its own capital stock....

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The total amount of cash and other assets received by a corporation from the stockholders in exchange for the shares is ________. A. always equal to par value B. referred to as retained earnings C. always below its stated value D. referred to as paid-in capital
Treasury Stock For numerous reasons, a corporation may reacquire shares of its own capital stock. When a corporation purchases treasury stock, it has two options as to how to account for the shares: (1) the cost method and (2) the par value method. Required: Write a short report that compares and contrasts the cost method with the par value method for each of the following: 1. Purchase of shares at a price less than par value. 2. Purchase of shares at a price greater than par value. 3. Subsequent resale of treasury shares at a price less than purchase price, but more than par value. 4. Subsequent resale of treasury shares at a price greater than both purchase price and par value. 5. Effect on net income.
1. What is the accounting for treasury share transactions? a. On repurchase or re-issuance of previously purchased own shares, no gain or loss is recognized. b. Treasury shares are accounted for as financial assets. c. On re-issuance of treasury shares, a gain or loss is recognized equal to the difference between the previous repurchase price and the re-issuance price. d. On repurchase of treasury shares, a gain or loss is recognized equal to the difference between the amount at which the shares were issued and the repurchase price for the shares. . 2. If a no-par value share is issued... a. The value of each share is automatically ₱5. b. The corporation is automatically in violation of its state charter. c. There is no legal capital. d. The entire proceeds is considered as legal capital. . 3 Which of the following statements relating to bonds is incorrect? a. None of the choices b. A bond’s face value is the amount the issuer must pay…
1. What is the accounting for treasury share transactions? a. Treasury shares are accounted for as financial assets. b. On repurchase or re-issuance of previously purchased own shares, no gain or loss is recognized. c. On re-issuance of treasury shares, a gain or loss is recognized equal to the difference between the previous repurchase price and the re-issuance price. d. On repurchase of treasury shares, a gain or loss is recognized equal to the difference between the amount at which the shares were issued and the repurchase price for the shares.
In applying the treasury shares (i.e., cash in/cash out) method to determine the dilutive effect of shares, options and warrants, the proceeds assumed to be received upon exercise of the options and warrants Select one: a. are used to calculate the number of common shares repurchased at the average market price, when calculating diluted earnings per share. b. are added, net of tax, to the numerator of the calculation for diluted earnings per share. c. are disregarded in the calculation of earnings per share if the exercise price of the options and warrants is less than the ending market price of common shares. d. are deducted from the income available to common share holders. e. None of the above.
Under IFRS, a purchase by a company of its own shares results in: a. an increase in treasury shares. b. a decrease in assets. c. a decrease in equity. d. All of the above.
Which of the following statements is incorrect? Issued shares of stocks include those that have been at one time been sold to the public and which have been subsequently retired. If an entity’s capital stock is retired, the Share Capital account is reduced by its par value, the number of shares is reduced by the stock retired and the treasury stock is credited at cost. Treasury shares may be reissued as dividends, in which case the cost of the shares should be charged to Retained Earnings. Though may be used in computing for the Share Capital, stated value is not similar to par value of stock.
Sale of treasury shares at less than cost shall be charged to * a. Loss on sale of treasury shares to be reported as other expense b. Retained earnings and then additional paid in capital from treasury share transactions c. Additional paid in capital from treasury share transactions and then retained earnings d. Share premium from original issuance, additional paid in capital from treasury share transactions and then retained earnings
At the date of financial statements, ordinary shares issued would exceed ordinary shares outstanding as a result of the a declaration of share bonus b payment in full of subscribed shares c purchase of treasury shares d. declaration of a share split Quasi-reorganization effected thru revaluation of Property, plant and equipment a.eliminates the deficit by applying the revaluation surplus only up to the extent of the deficit b.eliminates the deficit by applying the share premium balance of a class of share only up to the extent of the deficit. c.eliminates the deficit up to the value of the revaluation surplus d.eliminates the deficit up to the value of the share premium from a class of share.
If a company resells treasury stock at a loss, and that amount exceeds any balance in the treasury stock APIC account, the remaining loss is debited to: Group of answer choices Additional Paid in Capital (APIC) -Common Stock Treasury stock cannot be sold at a loss Retained earnings Loss on sale of treasury stock
When a company buys shares of its own stock to be held in treasury, it records a reduction in: B . both assets and shareholders’ equity.
When non-par value shares are reacquired at a cost greater than their average issue price and cancelled, what account(s) should be debited? Select one: a. The share account for the total cost. b. The share account for the average issue price, contributed surplus-repurchases up to its account balance, other contributed surplus relating to this class of shares in proportion to the number of shares repurchased versus outstanding and lastly retained earnings for any remaining amount. c. The share account for the average per share amount, retained earnings for the additional amount, and lastly contributed surplus for any remaining amount. d. The share account for the average per share amount and a loss account for the additional amount. e. none of the above answers are correct.