Pember Corporation started business in 2009 by issuing 200,000 shares of $20 par common stock for $36 each. In 2014, 25,000 of these shares were purchased for $52 per share by Pember Corporation and held as treasury stock. On June 15, 2015, these 25,000 shares were exchanged for a piece of property that had an assessed value of $1,010,000. Pember's stock is actively traded and had a market price of $60 on June 15, 2015. 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) $1,000,000.
B) $ 600,000.
C) $ 190,000.
D) $ 200,000.

Question

Quizplus · Accepted Answer

The treasury stock was originally purchased for $52 per share, totaling $1,300,000 (25,000 shares x $52). When exchanged for property, the shares had a market value of $60 per share, totaling $1,500,000 (25,000 shares x $60). The difference of $200,000 ($1,500,000 - $1,300,000) is credited to paid-in capital from treasury stock transactions.

Pember Corporation Started Business in 2009 by Issuing 200,000 Shares