When treasury shares are purchased for more than the par value of the shares and the cost method is used to account for treasury shares, what account(s) should be debited?
A)Treasury shares for the par value and share premium for the excess of the purchase price over the par value.
B)share premium for the purchase price.
C)Treasury shares for the purchase price.
D)Treasury shares for the par value and retained earnings for the excess of the purchase price over the par value.

Question

Quizplus · Accepted Answer

Under the cost method, treasury shares are recorded at the purchase price, so the Treasury Shares account is debited for the full amount paid.

When Treasury Shares Are Purchased for More Than the Par