Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 18, Problem 18.18Q
When a corporation acquires its own shares, those shares assume the same status as authorized but unissued shares, as if they never had been issued. Explain how this is reflected in the accounting records if the shares are formally retired.
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Check out a sample textbook solutionStudents have asked these similar questions
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 corporation acquires its own shares, those shares assume the same status as authorized but unissued shares, as if they never had been issued. Explain how this is reflected in the accounting records if the shares are formally retired.
If a company’s constitution does not contain rules governing the forfeiture of shares, then the company:
Select one:
A. can register the shares in the name of another shareholder but cannot receive payment from that shareholder.
B. may forfeit shares and reissue them at a later date.
C. may forfeit shares but not reissue them.
D. cannot forfeit shares.
Chapter 18 Solutions
Intermediate Accounting, 10 Ed
Ch. 18 - Identify and briefly describe the two primary...Ch. 18 - Prob. 18.2QCh. 18 - Prob. 18.3QCh. 18 - Prob. 18.4QCh. 18 - Prob. 18.5QCh. 18 - Prob. 18.6QCh. 18 - Prob. 18.7QCh. 18 - What is meant by a shareholders preemptive right?Ch. 18 - Terminology varies in the way companies...Ch. 18 - Most preferred shares are cumulative. Explain what...
Ch. 18 - The par value of shares historically indicated the...Ch. 18 - Prob. 18.12QCh. 18 - How do we report components of comprehensive...Ch. 18 - The balance sheet reports the balances of...Ch. 18 - At times, companies issue their shares for...Ch. 18 - Prob. 18.16QCh. 18 - The costs of legal, promotional, and accounting...Ch. 18 - When a corporation acquires its own shares, those...Ch. 18 - Discuss the conceptual basis for accounting for a...Ch. 18 - The prescribed accounting treatment for stock...Ch. 18 - Brandon Components declares a 2-for-1 stock split....Ch. 18 - What is a reverse stock split? What would be the...Ch. 18 - Suppose you own 80 shares of Facebook common stock...Ch. 18 - Prob. 18.24QCh. 18 - Comprehensive income LO181 Schaeffer Corporation...Ch. 18 - Stock issued LO184 Penne Pharmaceuticals sold 8...Ch. 18 - Prob. 18.3BECh. 18 - Prob. 18.4BECh. 18 - Prob. 18.5BECh. 18 - Retirement of shares LO185 Agee Storage issued 35...Ch. 18 - Treasury stock LO185 The Jennings Group...Ch. 18 - Prob. 18.8BECh. 18 - Prob. 18.9BECh. 18 - Property dividend LO187 Adams Moving and Storage,...Ch. 18 - Stock dividend LO188 On June 13, the board of...Ch. 18 - Prob. 18.14BECh. 18 - Stock split LO188 Refer to the situation...Ch. 18 - Prob. 18.16BECh. 18 - Prob. 18.2ECh. 18 - Earnings or OCI? LO182 Indicate by letter whether...Ch. 18 - Stock issued for cash; Wright Medical Group LO184...Ch. 18 - Issuance of shares; noncash consideration LO184...Ch. 18 - Prob. 18.6ECh. 18 - Share issue costs; issuance LO184 ICOT Industries...Ch. 18 - Prob. 18.14ECh. 18 - Prob. 18.16ECh. 18 - Prob. 18.20ECh. 18 - Prob. 18.22ECh. 18 - Prob. 18.25ECh. 18 - Various stock transactions; correction of journal...Ch. 18 - Prob. 18.1DMPCh. 18 - Prob. 18.6DMPCh. 18 - Prob. 18.8DMP
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- If a company chooses to purchase its own shares and then either (1) retires the repurchased shares and issues additional shares, or (2) resells the repurchased shares, can a gain or loss be recognized by the company? Why or why not?arrow_forwardWhich of the following is true? * When treasury shares are reissued, the related unrestricted retained earnings are reverted back to the appropriated retained earnings. The maximum amount to be used in acquiring treasury shares is the balance of the unrestricted retained earnings. Treasury shares do not affect the total shareholder's equity. Shares can be considered as treasury shares regardless of whether they are retired or not.arrow_forwardThe ability of any stockholder to transfer stock to another person without the knowledge or the consent of the other stockholders and without disturbing the normal activities of the corporation is called a. unlimited life. b. suitability for large scale operations. c. taxation of corporate earnings. d. transferable ownership units.arrow_forward
- The corporation's own stock that has been issued and then bought back by the company is referred to as:arrow_forwardThe preemptive right refers to the right of common stockholders to: Maintain their proportionate interests in the corporation when additional shares are issued A) Receive assets before preferred stockholders when the corporation dissolves C) Receive dividends before interest is paid to creditors B) D) Vote on matters requiring the approval of ownersarrow_forwardWhen 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.arrow_forward
- Identify which category of shareholder's equity is affected by each item and briefly explain how it is affected. 1. Sale of additional ordinary shares of the corporationarrow_forwardInterest on debt incurred to acquire shares in a public corporation is only deductible if the shares have a history of paying regular dividends. True or Falsearrow_forwardIt refers to the natural right of stockholders to subscribe to all issues or disposition of shares of any class in proportion to their present shareholdings in order to preserve the ownership interests in the corporation.arrow_forward
- When a company requests a further payment from shareholders of the unpaid amounts on their shares, it: Select one: A. makes a call on the shares. B. converts the shares into debentures. C. forfeits the shares. D. makes a further allotment of those shares.arrow_forwardWhich 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 paidarrow_forwardWhen the company selling previously issued shares to another company or individual. This a transaction that would be traded in the primary market. Select one: True Falsearrow_forward
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