Under the cost method of accounting for treasury stock transactions, when the proceeds from a sale are greater than the cost, the excess over cost is treated as an)
A) increase in Other Expenses from Treasury Stock Sales.
B) increase in Additional Paid-in Capital from Treasury Stock.
C) increase in a contra-shareholders' equity account.
D) None of these choices.

Question

Quizplus · Accepted Answer

Under the cost method, when treasury stock is sold for more than its cost, the excess is credited to Additional Paid-in Capital from Treasury Stock, reflecting the additional capital contributed by shareholders over the cost of the treasury shares.

Under the Cost Method of Accounting for Treasury Stock Transactions