The following data is available for BOX Corporation at December 31, 2014: Ordinary shares, par €10 (authorized 25,000 shares} €200,000
Treasury shares (at cost €15 per share) € 900
Based on the data, how many ordinary shares have been issued?

Question

Quizplus · Accepted Answer

The authorized shares only indicate the maximum number of shares that a company is allowed to issue, it does not necessarily mean that all of them have been issued. The treasury shares have already been issued and then bought back by the company, so they do not count towards the number of ordinary shares outstanding. Therefore, the number of ordinary shares issued is calculated as follows: 
Total shareholders' equity = Share capital + Retained earnings 
200,000 + Retained earnings = Total shareholders' equity 
Retained earnings = Total shareholders' equity - Share capital 
We do not have information on the retained earnings, but assuming that it is positive, it means that the total shareholders' equity is higher than the share capital, and therefore there must be some ordinary shares issued. We can calculate the number of ordinary shares issued as follows: 
Share capital = Par value per share × Number of ordinary shares issued 
Number of ordinary shares issued = Share capital / Par value per share 
Number of ordinary shares issued = 200,000 / 10 = 20,000 
Therefore, the best choice is B.

The Following Data Is Available for BOX Corporation at December