How should a gain from the sale of treasury stock be reflected when using the single transaction method of recording treasury stock transactions?

Question

Quizplus · Accepted Answer

When using the single transaction method of recording treasury stock transactions, the gain from the sale of treasury stock should be reflected as contributed capital from treasury stock transactions. This account is a part of shareholders' equity and represents the excess of the sales price over the cost of the treasury stock sold. It is not reported as ordinary earnings on the income statement, nor is it an increase in the amount shown for common stock. An extraordinary item is a material event or transaction that is both unusual and infrequent, and the gain from the sale of treasury stock is unlikely to meet this criteria.

How Should a Gain from the Sale of Treasury Stock