When Treasury Shares Are Purchased for More Than the Par

question 73

Multiple Choice

When treasury shares are purchased for more than the par value of the shares and the cost method is used to account for treasury shares, what account(s) should be debited?

• A)Treasury shares for the par value and share premium for the excess of the purchase price over the par value.
• B)have premium for the purchase price.
• C)Treasury shares for the purchase price.
• D)Treasury shares for the par value and retained earnings for the excess of the purchase price over the par value.

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Definitions:

Intercompany Bond Gains

Profits arising from bonds sold or traded between companies within the same corporate group.

Unamortized Bond Discount

The portion of the bond issuance price that is below the face value and has not yet been expensed in the financial statements.

Consolidated Income Statement

An income statement that combines the financial performance of a parent company and its subsidiaries, showing the total revenue, expenses, and net income of the entire group.

Intercompany Bonds

Bonds issued between entities within the same corporate group, often used for internal financing purposes.