When existing corporations issue stock, costs such as legal fees and underwriter's fees are usually accounted for as
A)organization expenses
B)reduction of Additional Paid-in Capital
C)organizational costs
D)reduction of Retained Earnings

Question

Quizplus · Accepted Answer

When existing corporations issue stock, costs such as legal fees and underwriter's fees are typically accounted for as a reduction of Additional Paid-in Capital. This approach reflects the direct costs associated with issuing the stock and is not treated as an expense in the income statement but rather as a deduction from the proceeds of the stock issuance, affecting shareholders' equity.

When Existing Corporations Issue Stock, Costs Such as Legal Fees