In keeping with a modernization of corporate statutes in its home state, UMC Corporation decided in...
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In keeping with a modernization of corporate statutes in its home state, UMC Corporation decided in 2021 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, 2020, UMC's balance sheet reported the following shareholders' equity: ($ in millions) $ 200 Common stock, $1 par Paid-in capital-excess of par Retained earnings Treasury stock (5 million shares at cost) 600 1,000 (32) Total shareholders' equity $1,768 Required: a. Identify the type of accounting change this decision represents. b. Prepare the journal entry to effect the reclassification of treasury shares as retired shares. Required A Required B Prepare the journal entry to effect the reclassification of treasury shares as retired shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 sho entered as 10).) View transaction list Journal entry worksheet 1 <> Record the entry to reclassify treasury shares as retired shares. Note: Enter debits before credits. Event General Journal Debit Credit 1 In keeping with a modernization of corporate statutes in its home state, UMC Corporation decided in 2021 to discontinue accounting for reacquired shares as treasury stock. Instead, shares repurchased will be viewed as having been retired, reassuming the status of unissued shares. As part of the change, treasury shares held were reclassified as retired stock. At December 31, 2020, UMC's balance sheet reported the following shareholders' equity: ($ in millions) $ 200 Common stock, $1 par Paid-in capital-excess of par Retained earnings Treasury stock (5 million shares at cost) 600 1,000 (32) Total shareholders' equity $1,768 Required: a. Identify the type of accounting change this decision represents. b. Prepare the journal entry to effect the reclassification of treasury shares as retired shares. Required A Required B Prepare the journal entry to effect the reclassification of treasury shares as retired shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 sho entered as 10).) View transaction list Journal entry worksheet 1 <> Record the entry to reclassify treasury shares as retired shares. Note: Enter debits before credits. Event General Journal Debit Credit 1
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Answer Required a The above decision represents a change in accounting pr... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0078025839
9th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson , Wayne Thomas
Posted Date:
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