If a company does not maintain its treasury stock records on a specific identification basis, which of the following approaches may be used to record a reduction in the treasury stock account when the stock is reissued?
A)FIFO or average costing
B)FIFO or LIFO costing
C)LIFO or average costing
D)none of these

Question

Quizplus · Accepted Answer

FIFO or average costing can be used to record a reduction in the treasury stock account when the stock is reissued if the company does not maintain its treasury stock records on a specific identification basis. These methods assume that the first shares purchased (FIFO) or an average cost of all shares purchased (average costing) are the first shares sold.

If a Company Does Not Maintain Its Treasury Stock Records