When a company retires its own common shares, the company must a. decrease the common share account balances by the original issue price. b. record a gain or loss depending on the difference between original selling price and repurchase cost. c. get the approval of the government to do so. d. issue a different class of shares to the former shareholders.

When a company retires its own common shares, the company must a. decrease the common share account balances by the original issue price. b. record a gain or loss depending on the difference between original selling price and repurchase cost. c. get the approval of the government to do so. d. issue a different class of shares to the former shareholders.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A company would repurchase its own stock for all of the following reasons except:a. it wishes to prevent unwanted takeover attempts.b. it wishes to increase the earnings per share.c. it believes the stock is overvalued.d. it needs the stock for employee bonuses.
For what reason might a company purchase treasury stock? To increase shareholder liquidity To execute an acquisition through a share exchange To increase the number of outstanding shares of stock To reduce future income taxes
When non-par value shares are reacquired at a cost greater than their average issue price and cancelled, what account(s) should be debited? Select one: a. The share account for the total cost. b. The share account for the average issue price, contributed surplus-repurchases up to its account balance, other contributed surplus relating to this class of shares in proportion to the number of shares repurchased versus outstanding and lastly retained earnings for any remaining amount. c. The share account for the average per share amount, retained earnings for the additional amount, and lastly contributed surplus for any remaining amount. d. The share account for the average per share amount and a loss account for the additional amount. e. none of the above answers are correct.
76. Whom of the following is paid at last on the dissolution of a company? A.Reserve creditor B.Equity shareholder C.Preference shareholder D.Debenture holder
ABC Corporation will be converted into a publicly listed corporation. The original shareholders would like to protect its intangibles from probable acquirers. It would also like to get the best valuation of the shares to be issued. Based on those information, which will be the LEAST LIKELY strategy to be taken by the original shareholders?a. Transfer of crown jewelb. Asking for assistance of killer beesc. Coordinating with several white squiresd. Application of a scorched earth
How will retained earnings be affected by purchase of treasury shares and subsequent sale of treasury shares at more than acquisition cost? Acquisition of TS Sale of TS a. no effect increase b. Increase no effect c. no effect no effect d. Increase decrease
Will an acquiring corporation recognize gain or loss when it issues its stock to acquire the assets or stock of target corporation in a reorganization? Explain how it will work. How do exchanging shareholders and security holders determine their basis for the stock and securities received in a corporate reorganization? Give an example
Which of the following is not a right of owners of common shares? Residual assets in liquidation Vote on proposed mergers Vote for company directors Obtain past dividends not paid
In some circumstances, corporations will buy back their own stock – called Treasury Stock. Identify three reasons why a company may choose to do so.
Which of the following statements correctly relate to ordinary shares? i) They represent an ownership interest.ii) Ordinary equity holders are the first to have their claims met in the event of the company going into administration.iii) As dividends are the return to the shareholders, they are paid out of operating profits before tax.iv) Control rights often differ between ordinary and other classes of share.
When a public shareholding company changes an accounting policy voluntarily, it has to (a) Inform shareholders prior to taking the decision. (b) Account for it retrospectively. (c) Treat the effect of the change as an extraordinary item. (d) Treat it prospectively and adjust the effect of the change in the current period and future periods.
A corporation that transfers restricted stock to an employee as compensation may deduct the stock's fair market value in the year of transfer even if the employee doesn't recognize the value as gross income in the year of transfer. T/F also explain the reason, thanks.