TOPIC: TREASURY STOCK Nelson Industries, a U$.$S$.-$based company, has over the years issued $1$ million shares of common stock to shareholders. Currently, in evaluating ownership, Nelson has entered into a stock repurchase agreement to buy a significant block of its stock from a major stockholder that represents a controlling interest in the company.

However, the major stockholder has agreed to sell at a price higher than the current market price. The stockholder has agreed to a price of $\backslash$$$25$ per share, which is in excess of the current market price of $\backslash$$$20$ per share.

Nelson's controller is somewhat unsure of the proper accounting for this purchase. She believes that the treasury stock purchase should be at the $\backslash (\backslash$$ $20\backslash )$ per share price and the excess written off as some type of loss since the purchase agreement does not include any other rights or privileges. The controller seeks your advice as to the proper accounting for the treasury stock repurchase.

Required: Utilize the FASB's Codification to provide a recommendation to the controller for the treasury stock purchase transaction. Provide specific Codification references.

Knowledge Busters: Please follow this format answering the questions.

Format to Document Your Accounting Research

Problem Identification:

a$.$ State Fact$($s$)/$ Issue$($s$)/$ Structure Question$($s$)/$ What Section$($s$)$ would apply to

address your question$($s$)?$

Identify Key Words and Start the FASB Codification Research Using the Key Words:

a$.$ This will provide you with specific Codification Topic$($s$)$ that relate to the Key

Words.

b$.$ Use this as a guide to facilitate your research using Key Words to specific

Sectio$($s$)$ that would address your question$($s$).$ Document what you think is the

appropriate Section$($s$)$ that would address your question$($s$).$

Codification References and Analysis:

a$.$ Document your research and include a copy of the Section$($s$)$ and

Paragraphs$($s$)$identified that supports and addresses your question$($s$)$ as part of

your documentation.

Discussion and Conclusion:

Format of the structure of this FASB Codification and the appropriate citation reference.

Make sure you use the appropriate citation reference in your research.

XXX$-$YY$-$ZZ where XXX$=$ Topic, YY$=$ Subtopic, ZZ$=$ Section