Direct costs incurred to sell stock such as underwriting costs should be accounted for as 1. a reduction of additional paid-in capital.2. an expense of the period in which the stock is issued.3. an intangible asset.

Question

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Direct costs incurred to sell stock, such as underwriting costs, are accounted for as a reduction of additional paid-in capital. This approach reflects the costs directly against the proceeds from the stock issuance, rather than treating them as an expense of the period or as an intangible asset.

Direct Costs Incurred to Sell Stock Such as Underwriting Costs