TOFU, Inc. TOFU, Inc. is a calendar-year, nonpublic company that follows U.S. GAAP. TOFU uses the cost method to account for repurchases of treasury stock. Recently, TOFU repurchased 10,000 shares of its common stock from a key shareholder at $55 per share. This particular shareholder had initiated a lawsuit against TOFU. Thus, a settlement of this lawsuit was included in the repurchase agreement. Because TOFU is not publicly traded, it does not have an established market price. It repurchased shares last year at $35 per share. However, TOFU has increased performance each year for the past 5 years in terms of operating cash flow and earnings. Net income last year was $1.67 per share. This year it was $2 per share. Prepare a memo to the file addressed to TOFU's management. Please provide the journal entry(ies) that TOFU should make when it reacquires the shares. Use the Codification to provide support for your response.

TOFU, Inc. TOFU, Inc. is a calendar-year, nonpublic company that follows U.S. GAAP. TOFU uses the cost method to account for repurchases of treasury stock. Recently, TOFU repurchased 10,000 shares of its common stock from a key shareholder at $55 per share. This particular shareholder had initiated a lawsuit against TOFU. Thus, a settlement of this lawsuit was included in the repurchase agreement. Because TOFU is not publicly traded, it does not have an established market price. It repurchased shares last year at $35 per share. However, TOFU has increased performance each year for the past 5 years in terms of operating cash flow and earnings. Net income last year was $1.67 per share. This year it was $2 per share. Prepare a memo to the file addressed to TOFU's management. Please provide the journal entry(ies) that TOFU should make when it reacquires the shares. Use the Codification to provide support for your response.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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