What is the effect on total stockholders equity when treasury stock is acquired?
When treasury stock is acquired, what is the effect on total stockholders' equity? decrease treasury stock decreases stockholder's equity When treasury stock is resold at a gain, the difference between its cost and the cash received when resold:
What is the impact of the purchase and sale of treasury stock?
The purchase and sale of treasury stock has no impact on the income statement. C. Treasury stock represents a negative equity account. D. All of these. D. What would be the impact on the accounting equation when a company acquires treasury stock?
When treasury stock is resold at a price above cost?
When treasury stock is resold at a price above cost: additional paid in capital is increased When treasury stock is acquired, what is the effect on total stockholders' equity? decrease treasury stock decreases stockholder's equity When treasury stock is resold at a gain, the difference between its cost and the cash received when resold:
What happens when a company sells 50 shares of treasury stock?
Selling 50 shares of treasury stock results in 50 additional shares outstanding. When the company sold the 50 shares of treasury stock, it received $750 in cash. The shares had an original cost of $10 each, or $500. Thus, the shares were sold at a premium of $250 to their original cost.
When treasury stock is purchased what is the effect on total stockholders equity?
Treasury stock reduces total shareholders' equity on a company's balance sheet, and it is therefore a contra equity account. The cost method and the par value method are the two methods of recording treasury stock.
What is the effect on total stockholders equity if treasury stock is resold at more than cost?
-An increase in total stockholders' equity. -A decrease in total stockholders' equity. When treasury stock is resold, total stockholders' equity: -Increases.
When a company acquires treasury stock assets and stockholders equity both decrease?
When a company acquires treasury stock, assets and stockholders' equity both decrease. Net income increases when treasury stock is sold for an amount in excess of its cost. Total stockholders' equity increases when treasury stock is sold for an amount less than its cost.
When treasury stock is purchased for more than the par value of the stock and the cost method?
When treasury stock is purchased for more than the par value of the stock and the cost method is used to account for treasury stock, what account(s) and how much should be debited? Treasury stock for the purchase price. Treasury Stock for $90,000 and Paid-in Capital from Treasury Stock for $24,000.
What happens when you sell treasury stock?
Selling treasury stock always results in an increase in shareholders' equity. What happens when shares are sold at a discount to their cost. The preceding example shows you what happens when a company sells treasury stock at a premium to cost.
How much did the company pay when it sold 50 shares of treasury stock?
When the company sold the 50 shares of treasury stock, it received $750 in cash. The shares had an original cost of $10 each, or $500. Thus, the shares were sold at a premium of $250 to their original cost.
What is the paid in capital line of treasury stock?
The "paid-in capital from treasury stock" line is adjusted to reflect the $250 premium from the sale of 50 shares of treasury stock. The "treasury stock, at cost" line is adjusted to reflect that there are only 50 shares of treasury stock remaining at a cost of $10 each ($500).
How much did Foolish Corporation pay to buy back 100 shares?
Remember, Foolish Corporation originally paid $10 to buy back 100 shares. In the last example, it sold 50 shares of treasury stock for $15 each, a $5 premium to cost. At the end of the last example, shareholders' equity looked like this.
When did companies start buying back stock?
Beginning in the 1980s , however, companies started to return more cash to shareholders by buying back stock. When shares are bought back, the shares go into the "treasury stock" line on the balance sheet. Sometimes, companies buy back stock only to sell it at a later date.
Do companies buy back stock?
Sometimes, companies buy back stock only to sell it at a later date. These transactions, like all transactions, have to be accounted for. We'll use an example to show you what happens when companies sell treasury stock, and how this affects shareholders' equity.
Does selling treasury stock increase equity?
But take notice: Even though the treasury stock was sold at a discount to cost, shareholders' equity increases. That's because selling treasury stock results in an increase in cash with no offsetting liability. Thus, shareholders' equity increases by $100. Again, selling treasury stock always results in an increase in shareholders' equity.
