Change from the treasury stock method to retired stock • LO20–2 In keeping with a modernization of corporate statutes in its home state, UMC Corporation decided in 2018 to discontinue accounting for reacquired shares as treasury stock. Instead, shares repurchased will be viewed as having been retired, reassuming the status of unissued shares. As part of the change, treasury shares held were reclassified as retired stock. At December 31, 2017, UMC’s balance sheet reported the following shareholders’ equity: Required: Identify the type of accounting change this decision represents and prepare the journal entry to effect the reclassification of treasury shares as retired shares.
Change from the treasury stock method to retired stock • LO20–2 In keeping with a modernization of corporate statutes in its home state, UMC Corporation decided in 2018 to discontinue accounting for reacquired shares as treasury stock. Instead, shares repurchased will be viewed as having been retired, reassuming the status of unissued shares. As part of the change, treasury shares held were reclassified as retired stock. At December 31, 2017, UMC’s balance sheet reported the following shareholders’ equity: Required: Identify the type of accounting change this decision represents and prepare the journal entry to effect the reclassification of treasury shares as retired shares.
Solution Summary: The author explains that in retrospective approach, the financial statements are restated in such a way that they reflect the new accounting principles adopted from the beginning.
Change from the treasury stock method to retired stock
• LO20–2
In keeping with a modernization of corporate statutes in its home state, UMC Corporation decided in 2018 to discontinue accounting for reacquired shares as treasury stock. Instead, shares repurchased will be viewed as having been retired, reassuming the status of unissued shares. As part of the change, treasury shares held were reclassified as retired stock. At December 31, 2017, UMC’s balance sheet reported the following shareholders’ equity:
Required:
Identify the type of accounting change this decision represents and prepare the journal entry to effect the reclassification of treasury shares as retired shares.
Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.
Which financial statement shows a company's financial position at a specific point in time?
A) Income StatementB) Statement of Cash FlowsC) Balance SheetD) Statement of Retained Earningscorrect op
Which financial statement shows a company's financial position at a specific point in time?
A) Income StatementB) Statement of Cash FlowsC) Balance SheetD) Statement of Retained Earningshelp
Which financial statement shows a company's financial position at a specific point in time?
A) Income StatementB) Statement of Cash FlowsC) Balance SheetD) Statement of Retained Earnings
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