Pember Corporation started business in 2005 by issuing 200,000 shares of $20 par ordinary shares for $36 each.In 2010, 20,000 of these shares were purchased for $52 per share by Pember Corporation and held as treasury shares.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 shares are actively traded and had a fair price of $60 on June 15, 2011.The cost method is used to account for treasury shares.The amount of share premium-treasury resulting from the above events would be

Question

Quizplus · Accepted Answer

The share premium-treasury is calculated as the difference between the fair value of the shares at the time of exchange and their cost. The shares were purchased at $52 each and exchanged when the fair value was $60 each. The premium is (60 - 52) * 20,000 = $160,000.

Pember Corporation Started Business in 2005 by Issuing 200,000 Shares