If a Company Sells Its Treasury Stock for More Than

question 39

Multiple Choice

If a company sells its treasury stock for more than it cost and records a gain on the income statement, then

• A)income and shareholders' equity are overstated.
• B)only income is overstated.
• C)only shareholders' equity is overstated.
• D)the income statement and balance sheet are properly stated.

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Definitions:

Goodwill

An intangible asset on a company's balance sheet that represents the premium paid over the fair market value of the acquired assets in a business acquisition.

Tangible Capital

Physical assets that are used in the operating activities of a business, such as buildings, machinery, and equipment.

Economic System

The organized way a country allocates resources and distributes goods and services in the national community.

Future Goods

Goods that are not yet produced or are not currently available but will be in the future.