{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter 1 - Solution Manual

The difference between the cost of the treasury

Info icon This preview shows pages 16–18. Sign up to view the full content.

View Full Document Right Arrow Icon
[The difference between the cost of the treasury shares and the stated value of a corporation's common stock repurchased and retired, or repurchased for constructive retirement, shall be reflected in capital. [ARB 43, paragraph Ch. 1B Par. 7, sequence 118.1] ] 505-30-30-8 [When a corporation's stock is retired, or repurchased for constructive retirement (with or without an intention to retire the stock formally in accordance with applicable laws), [ARB 43, paragraph Ch. 1B Par. 7, sequence 119] ][ an excess of repurchase price over par or stated value may be allocated between additional paid-in capital and retained earnings. [ARB 43, paragraph Ch. 1B Par. 7, sequence 120.1.1] ][ Alternatively, the excess may be charged entirely to retained earnings in recognition of the fact that a corporation can always capitalize or allocate retained earnings for such purposes. [ARB 43, paragraph Ch. 1B Par. 7, sequence 120.2.2.2.2] ][ If a portion of the excess is allocated to additional
Image of page 16

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
22 paid-in capital, it shall be limited to the sum of both of the following: [ARB 43, paragraph Ch. 1B Par. 7, sequence 120.1.2] ] a. [All additional paid-in capital arising from previous retirements and net gains on sales of treasury stock of the same issue [ARB 43, paragraph Ch. 1B Par. 7, sequence 120.2.1] ] b. [The pro rata portion of additional paid-in capital, voluntary transfers of retained earnings, capitalization of stock dividends, and so forth, on the same issue. [ARB 43, paragraph Ch. 1B Par. 7, sequence 120.2.2.1] ][ For this purpose, any remaining additional paid-in capital applicable to issues fully retired (formal or constructive) is deemed to be applicable pro rata to shares of common stock. [ARB 43, paragraph Ch. 1B Par. 7, sequence 120.2.2.2.1] ] 505-30-30-9 [When a corporation's stock is retired, or repurchased for constructive retirement (with or without an intention to retire the stock formally in accordance with applicable laws), an excess of par or stated value over the cost of treasury shares shall be credited to additional paid-in capital. [ARB 43, paragraph Ch. 1B Par. 7, sequence 121] ] 505-30-30-10 [Gains on sales of treasury stock not previously accounted for as constructively retired shall be credited to additional paid-in capital; losses may be charged to additional paid-in capital to the extent that previous net gains from sales or retirements of the same class of stock are included therein, otherwise to retained earnings. [ARB 43, paragraph Ch. 1B Par. 7, sequence 122.2] ] Comparative Financial Statements 205-10-45 Use print function printer friendly with sources 205-10-45-1 [The presentation of comparative financial statements in annual and other reports enhances the usefulness of such reports and brings out more clearly the nature and trends of current changes affecting the entity. Such presentation emphasizes the fact that statements for a series of periods are far more significant than those for a single period and that the accounts for one period are but an installment of what is essentially a continuous history. [ARB 43, paragraph Ch. 2A Par. 1, sequence 130] ] 205-10-45-2
Image of page 17
Image of page 18
This is the end of the preview. Sign up to access the rest of the 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