Assume that a company issued 10,000 shares for $30/share and a par value of $5/share.1,000 shares were repurchased back at $22/share.Which statement about share repurchases and cancellation is correct?

Question

Quizplus · Accepted Answer

The contributed surplus from the share repurchase must be separated from the contributed surplus on share issuance because they are separate transactions. The contributed surplus from share issuance is credited when shares are issued above par value, while the contributed surplus from share repurchase is debited when shares are repurchased above their cost. Therefore, it is important to record them separately in the financial statements.

Assume That a Company Issued 10,000 Shares for $30/share and a Par