Which Statement Is Correct About the "Two Transaction Method" for Treasury

question 36

Multiple Choice

Which statement is correct about the "two transaction method" for treasury shares resold for greater than their repurchase cost?

• A)This method decreases the contributed surplus when the repurchased shares are later resold.
• B)This method has the same effect on contributed surplus to that of the two transaction method.
• C)This method treats the reacquisition and subsequent sale as one cycle for accounting.
• D)This method increases contributed surplus at the time of repurchase.

---

Definitions:

Expected-Rate-Of-Return

The anticipated return on an investment, expressed as a percentage of the total amount invested.

R&D Expenditure

The amount of money spent on research and development activities to create new products, processes or improve existing ones.

Interest-Rate Cost

The cost associated with borrowing money, expressed as a percentage of the total amount borrowed, which accrues over the period of the loan.

Venture Capital

Financing that investors provide to startup companies and small businesses believed to have long-term growth potential.