How should a gain from the sale of treasury stock be reflected when using the single transaction method of recording treasury stock transactions?
A)As an increase in the amount shown for common stock
B)As ordinary earnings shown on the income statement
C)As an extraordinary item shown on the income statement
D)As contributed capital from treasury stock transactions

Question

Quizplus · Accepted Answer

Gains from the sale of treasury stock, when using the single transaction method, are not recognized in earnings but are instead recorded as an increase in equity under the account "contributed capital from treasury stock transactions." This reflects the excess of the sale price over the cost of the treasury shares sold.

How Should a Gain from the Sale of Treasury Stock