Quick Question:
This is a question from Gleim:
Treasury stock was acquired for cash at a price in excess of its par value. The treasury stock was subsequently reissued for cash at a price in excess of its acquisition price. Assuming that the cost method of accounting for treasury stock transactions is used, what is the effect on retained earnings?
The answer is no effect on the reacquisition and no effect on the reissuance..
However.. if using the Cost method.. the JE would be this:
T/S XX (at the cost)
Cash…. XX (at the cost)
Since there is nothing in APIC due to the acquisition then why use the RE? Should I use APIC unless it tells me otherwise, i.e. when it specifically tells me that no reacquisitions were done during the year?
AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE
IM GOING TO BE A CPA!!!!!
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