When treasury stock is purchased for more than its par value,Treasury Stock is debited for the purchase price under which of the following methods? Cost Method Par Value Method
A) No No
B) No Yes
C) Yes No
D) Yes Yes

Question

Quizplus · Accepted Answer

When treasury stock is purchased for more than its par value, the excess is recorded in the additional paid-in capital account. Therefore, under the Cost Method, Treasury Stock is debited for the purchase price and Additional Paid-in Capital is credited for the difference between the purchase price and the par value. The Par Value Method is not appropriate in this situation because it only considers the par value of the stock.

When Treasury Stock Is Purchased for More Than Its Par