How should a "gain" from the sale of treasury stock be reflected when using the cost method of recording treasury stock transactions? As ordinary earnings shown on the income statement. As paid-in capital from treasury stock transactions. As an increase in the amount shown for common stock. As an extraordinary item shown on the income statement. Which of the following best describes a possible result of treasury stock transactions by a corporation? May increase net income if the cost method is used. Which of the following features of preferred stock makes the security more like debt than an equity instrument?
share proportionately in corporate assets upon liquidation. share proportionately in any new issues of stock of the same class. receive cash dividends before they are distributed to preferred stockholders. The pre-emptive right of a common stockholder is the right to a. Which of the following is not a legal restriction related to profit distributions by a corporation? The amount distributed to owners must be in compliance with the state laws governing corporations. The amount distributed in any one year can never exceed the net income reported for that year. Profit distributions must be formally approved by the board of directors. Dividends must be in full agreement with the capital stock contracts as to preferences and participation. In January 2012, Finley Corporation, a newly formed company, issued 10,000 shares of its par common stock for per share. shares held as an investment by the treasurer of the corporation. the amount of capital the state of incorporation allows the company to accumulate over its existence.
share proportionately in any new issues of stock of the same class. receive cash dividends before other classes of stock without the pre-emptive right. sell capital stock back to the corporation at the option of the stockholder. receive the same amount of dividends on a percentage basis as the preferred stockholders. In a corporate form of business organization, legal capital is best defined as a.
Cumulative preferred dividends in arrears should be shown in a corporation's balance sheet as a.
an increase in current liabilities for the current portion and long-term liabilities for the long-term portion. At the date of the financial statements, common stock shares issued would exceed common stock shares outstanding as a result of the a.
Therefore, shareholders are not required to pay taxes on these distributions.
A corporation is incorporated in only one state regardless of the number of states in which it operates. The preemptive right allows stockholders the right to vote for directors of the company. Common stock is the residual corporate interest that bears the ultimate risks of loss. Earned capital consists of additional paid-in capital and retained earnings. True no-par stock should be carried in the accounts at issue price without any additional paid-in capital reported 6.
When capital dividends are paid out to shareholders, these are not taxable.