When treasury stock accounted for by the single-transaction method is subsequently sold for more than its purchase price, the excess of the cash proceeds over the carrying value of the treasury stock should be recognized as:

Question

Quizplus · Accepted Answer

When treasury stock is sold for more than its cost, the excess of the cash proceeds over the carrying value of the treasury stock is recognized as an increase in contributed capital, not as income or gain in the income statement. This treatment reflects the transaction's nature as an equity transaction rather than a profit-generating activity.

When Treasury Stock Accounted for by the Single-Transaction Method Is