An Analysis of Equity of Hahn Corporation as of January

question 98

Multiple Choice

An analysis of equity of Hahn Corporation as of January 1, 2012, is as follows:

Hahn uses the cost method of accounting for treasury shares and during 2010 entered into the following transactions:
Acquired 2,500 of its shares for $75,000.
Sold 2,000 treasury shares at $35 per share.
Sold the remaining treasury shares at $20 per share.
Assuming no other equity transactions occurred during 2012, what should Hahn report at December 31, 2012, as total share premium?

• A)$895,000
• B)$900,000
• C)$905,000
• D)$915,000

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Definitions:

Variable Costs

Costs that vary directly with the level of production or service delivery.

Flexible Budget

A budget designed to adapt in accordance with fluctuations in activity level or volume.

Contribution Margin

The amount by which sales revenue exceeds variable costs of a product, indicating how much contributes to covering fixed costs and generating profit.

Fixed Budget

A budget that is established at the beginning of a period and does not change, regardless of actual performance or outcomes.