{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

7252569-MIdterm-1 (dragged) 52 - will consist of the...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 15-18 G. Treasury Shares Treasury shares are not an asset. A corporation cannot own a part of itself. 1. In Canada, the CICA Handbook recommends that treasury shares, if they exist, be accounted for using the single-transaction method. This results in debiting the treasury shares account for the reacquisition cost and reporting this amount as a deduction from the total of contributed capital and retained earnings on the balance sheet. TEACHING TIP Illustration 15-2 can be used to provide an illustration of the entries required in accounting for the purchase and subsequent reissue of treasury shares. 2. Disclosure of treasury shares: Under the single-transaction method, treasury shares are shown as an unallocated reduction of shareholders' equity. H. Financial Reorganization The accounting procedure for the financial reorganization
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: will consist of the following steps: 1. The balance in the retained earnings (deficit) account is brought up to the date of the reorganization. In addition to closing any open income statement accounts, any asset write-downs related to circumstances that existed prior to the reorganization must be accounted for. 2. The updated deficit is reclassified to share capital, contributed surplus, or a separately identified account in shareholders' equity, giving retained earnings a zero balance. 3. The assets and liabilities are comprehensively revalued. New values are determined in negotiations among equity and non-equity interests. The difference between the old and new carrying values is accounted for as a revaluation adjustment and any costs directly incurred to carry out the reorganization are then recorded as share capital, contributed surplus, or a separately identified account within shareholders' equity....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern