Question: The text states that a company cannot earn profit from equity transactions. Why might this be? If a company buys widgets at $10 and resells

The text states that “a company cannot earn profit from equity transactions.” Why might this be? If a company buys widgets at $10 and resells them at $13, there is a $3 profit. What’s the difference if a company buys back some of its own stock for $25 per share and resells it at $28 per share? Why do you think that do not allow a profit (or loss) to be recorded on equity transactions?

Step by Step Solution

★★★★★

3.33 Rating (168 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The difference is that the purchase and sale of widgets involves an external partya customer Revenu... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

157-B-A-F-A (560).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

The following are selected accounts and balances for Mergaronite Company and Hill, Inc., as of December 31, 2021. Several of Mergaronite's accounts have been omitted. Credit balances are indicated by...

The text states that in E. coli ribo-nucleotide reductase Tyrosine-122 was identified as the source of the catalytically essential free radical. Describe experimental evidence that would support this...

The text states that "the globalization of financial markets has helped increase growth and efficiency in the world economy." Briefly explain which aspects of globalization help to increase growth in...

The text states that a side effect of 5-fluorouracil therapy is its incorporation into RNA. Show pathways by which 5-fluorouracil could be converted both to FdUMP and to an immediate RNA precursor

Financial Statement Analysis Obtain a copy of the 2009 annual report for a publicly held firm. Try to obtain an annual report for a retail or manufacturing firm. Be sure that the financial statement...

Please help, this is actually due today and the person who said they would answer this question that was initially due last night. Thank you for the help if possible. I need help with putting the...

\fTable of Contents List of Figures R2 - Internal Competitive Analysis Internal Competitive Analysis of Top Tier Firms The social networking industry is split into two market segments: Consumer and...

\f \f11TH EDITION STRATEGIC MANAGEMENT THEORY 11TH EDITION Strategic Management THEORY Charles W. L. Hill University of Washington - Foster School of Business Gareth R. Jones Melissa A. Schilling New...

What are the basic segment reporting requirements under US GAAP, and would you say they favor those stakeholders who prefer more or who prefer less disclosure? Reference: Please use Segment reporting...

CRefer to Colgate?s annual report in Appendix A at the end of the book and answer the following questions: a. What type of pension plan does Colgate have for a majority of its employees? What are the...

Edward Waltz is the bookkeeper for Edminson Company. Edward has been trying to get the balance sheet of Edminson Company to balance. It finally balanced, but now hes not sure it is correct....

Bakker Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total...

Defend each option. Response should be one page for each case. Answer both questions per case. A. TSA Tries to Improve its Pay Structure, Chapter 12 TSA Tries to Improve Its Pay Structure Asa U.S....

Suppose that Cassandra, the CEOs executive assistant, had been involved in the criminal activity of selling company data. And suppose that when the anonymous tip came in, she deleted the message...

A projectile is launched from point A and lands on the same level at D. Its maximum altitude is h. Determine and plot the fraction 2 of the total flight time that the projectile is above the level ...

A projectile is launched with speed v 0 from point A. Determine the launch angle which results in the maximum range R up the incline of angle (where 0 90). Evaluate your results for = 0, 30,...

Nitrogen-13 is a 9.97-min-half-life isotope used to tag ammonia for PET scans, including quantification of myocardial infarction. Consider an intravenous injection incorporating 20.0 mCi of N-13....

Youve been named captain of NASAs first interstellar mission since the Voyager robotic spacecraft. You board your spaceship, accelerate quickly to 0.8c, and cruise at constant speed toward Proxima...

2. State whether each of the followmg statements is True or False: (a) Purchase of stock-in-trade is an application of funds. (b) A decrease in current liabilities increases working capital. (c)...

Selected ledger account balances for Business Solutions follow. Required 1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2019. Compute amounts...

In early January 2018, NewTech purchases computer equipment for $154,000 to use in operating activities for the next four years. It estimates the equipments salvage value at $25,000. Prepare a table...

A fleet of refrigerated delivery trucks is acquired on January 5, 2018, at a cost of $830,000 with an estimated useful life of eight years and an estimated salvage value of $75,000. Compute the...

Back to Assignment Attempts Average / 1 10. Problem 10.10 (WACC) eBook Olsen Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate...

The Best Software is an company that specializes selling software and in helping clients who bought software form them. They provide free support to the corporate clients who bought software with...

please help asap Aduated WACC Clux Explorers, in an engineering from to the following capital com Using market value and took Verwcowe), te WACC www 40% b. 30% ... 20 d. 5 a. What is the market value...