The cost method is used to account for treasury stock. the, Ask an Expert

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Pember Corporation started business in 2005 by issuing 200,000 shares of $20 par common stock for $36 each. In 2010, 20,000 of these shares were purchased for $52 per share by Pember Corporation and held as treasury stock. On June 15, 2011, these 20,000 shares were exchanged for a piece of property that had an assessed value of $810,000. Perber's stock is actively traded and had a market price of $60 on June 15, 2011. The cost method is used to account for treasury stock. The amount of paid-in capital from treasury stock transactions resulting from the above events would be:

a. $800,000.

b. $480,000.

c. $390,000.

d. $160,000.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M961349

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