A corporation reacquires 60,000 shares of its own $10 par common stock for $3,000,000, recording it at cost. a) what effect does this transaction have on revenue or expense of the period? b) what effect does it have on stockholders' equity?

A corporation reacquires 60,000 shares of its own $10 par common stock for $3,000,000, recording it at cost. a) what effect does this transaction have on revenue or expense of the period? b) what effect does it have on stockholders' equity?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 8MC: The total amount of cash and other assets received by a corporation from the stockholders in...

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

A corporation reacquires 60,000 shares of its own $10 par common stock for $3,000,000, recording it at cost.

a) what effect does this transaction have on revenue or expense of the period?

b) what effect does it have on stockholders' equity?

Definition Definition Assets available to stockholders after a company's liabilities are paid off. Stockholders’ equity is also sometimes referred to as owner's equity. A stockholders’ equity or book value generally includes common stock, preferred stock, and retained earnings and is an indicator of a company's financial strength.

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