Which statement about "share buy-back" is correct?
A)If the repurchase price if below the issue price,an accounting "gain" results.
B)If the repurchase price if below the issue price,the difference goes to "common shares."
C)If the repurchase price if below the issue price,the difference goes to "contributed surplus."
D)If the repurchase price if below the issue price,an accounting "loss" results.

Question

Quizplus · Accepted Answer

If the repurchase price is below the issue price, the difference between the two amounts goes to "contributed surplus" and not "common shares" or as an accounting gain or loss. Contributed surplus is a balance sheet account that records the excess amounts received by a company above the par value of its stock. Thus, choice C is the correct statement.

Which Statement About "Share Buy-Back" Is Correct