Asked by Sierra Summers on Jul 26, 2024
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Under the cost method of accounting for treasury stock transactions, when the proceeds from a sale are greater than the cost, the excess over cost is treated as a(n)
A) increase in Other Expenses from Treasury Stock Sales
B) increase in Additional Paid-in Capital from Treasury Stock
C) increase in a contra-stockholders' equity account
D) increase in Additional Paid-in Capital on Common Stock
E) none of these
Cost Method
An accounting approach for investments, where the investment is recorded at its original purchase cost without subsequent change for market value fluctuations.
Treasury Stock Transactions
The buying, selling, or re-issuance of a company's own shares that were previously outstanding but were repurchased.
Additional Paid-in Capital
The amount of capital that is paid by investors above the par value of the stock during equity issuance.
- Understand the accounting practices associated with transactions of treasury stock.
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Learning Objectives
- Understand the accounting practices associated with transactions of treasury stock.
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