Question: Treasury Stock: If in cost method we pay an amount extra than the market value and that amount is clearly stated in the question how
Treasury Stock:
If in cost method we pay an amount extra than the market value and that amount is clearly stated in the question how do we pass the journal entry
If the Market value is say $20 and the company bought back the shares at $25 and its clearly stated why they bought the shares paying extra $5 that the Co. was forced to pay an amount extra . So how do we pass journal entry in this case?
As FASB states:
If the fair value of those other elements of the transaction is more clearly evident, for example, because an entity's shares are not publicly traded, that amount shall be assigned to those elements and the difference recorded as the cost of treasury shares.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
