Chapter 1 - Solution Manual

Treasury stock and 30 use print function printer

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Treasury Stock 505-30-25 and 30 use print function printer friendly with sources to find relevant sections 505-30-25-2 [Laws of some states govern the circumstances under which an entity may acquire its own stock and prescribe the accounting treatment therefor. If such requirements are at variance with the requirements of paragraphs 505-30-25-7 and 505-30-30-6 through 30-10, the accounting shall conform to the applicable law. [ARB 43, paragraph Ch. 1B Par. 11A, sequence 128.1] ]
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21 Subsequent Resale of Shares Repurchased 505-30-25-7 After an entity's repurchase of its own outstanding common stock, sometimes it may either retire the repurchased shares and issue additional common shares, or, as an alternative, resell the repurchased shares. In either case, the price received may differ from the amount paid to repurchase the shares. [While the net asset value of the shares of common stock outstanding in the hands of the public may be increased or decreased by such repurchase and retirement, such transactions relate to the capital of the corporation and do not give rise to corporate profits or losses. There is no essential difference between the following: [ARB 43, paragraph Ch. 1B Par. 7, sequence 118.2.1] ] a. [The repurchase and retirement of a corporation's own common stock and the subsequent issue of common shares [ARB 43, paragraph Ch. 1B Par. 7, sequence 118.2.2.1] ] b. [The repurchase and resale of its own common stock. [ARB 43, paragraph Ch. 1B Par. 7, sequence 118.2.2.2] ] 505-30-25-8 [Even though there may be cases where the transactions involved are so inconsequential as to be immaterial, as a broad general principle, such transactions shall not be reflected in retained earnings (either directly or through inclusion in the income statement). [ARB 43, paragraph Ch. 1B Par. 10, sequence 126] ][ The qualification shall not be applied to any transaction that, although in itself inconsiderable in amount, is a part of a series of transactions that in the aggregate are of substantial importance. [ARB 43, paragraph Ch. 1B Par. 11, sequence 127] ] 505-30-25-9 [The difference between the repurchase and resale prices of a corporation's own common stock shall be reflected as part of the capital of a corporation and allocated to the different components within stockholder equity as required by paragraphs 505-30-30-5 through 30-10. [ARB 43, paragraph Ch. 1B Par. 5, sequence 116] ] Allocating the Cost of Treasury Shares to Components of Shareholder Equity Upon Formal or Constructive Retirement 505-30-30-6 [Once the cost of the treasury shares is determined under the requirements of this Section, and if a corporation's stock is acquired for purposes other than retirement (formal or constructive), or if ultimate disposition has not yet been decided, paragraph 505-30-45-1 permits the cost of acquired stock to either be shown separately as a deduction from the total of capital stock, additional paid-in capital, and retained earnings, or be accorded the following accounting treatment appropriate for retired stock. [ARB 43, paragraph Ch. 1B Par. 7, sequence 122.1] ] 505-30-30-7
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  • Spring '13
  • Carey
  • Accounting, International Financial Reporting Standards, legal entity, Financial Accounting Standards Board, VIE

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