Once the balance in the additional paid‐in‐capital—treasury stock account reaches zero, or if there is no such account, the difference is a decrease (debit) to retained earnings. It is debited with the cost of goods sold and all the expenses connected with the purchase of goods and credited with sale proceeds of goods. There are three different classifications: trading, held to maturity, and available for sale securities. Credit balance represents gross profit, while debit balance represents gross loss. Preferred stock. Organization costs is an intangible asset, included on the balance sheet and amortized over some period not to exceed 40 years. CliffsNotes study guides are written by real teachers and professors, so no matter what you're studying, CliffsNotes can ease your homework headaches and help you score high on exams. According to NZ IAS-2, the cost of inventories includes all costs incurred in bringing the inventories to their present location and condition. Total purchases of goods fewer Purchase Returns. If the Board of Directors has not specified a stated value, the entire amount received when the shares are sold is recorded in the common stock account. But expenses relating to past or next year are not included in it. If the total value exceeds the par or stated value of the stock issued, the value in excess of the par or stated value is added to the additional paid‐in‐capital (or paid‐in‐capital in excess of par) account. If The J Trio, Inc., an established corporation, issues 10,000 shares of its $1 par value common stock in exchange for land to be used as a plant site, the market value of the stock on the date it is issued is used to value the transaction. In this guide, we'll outline the acquisition process from start to finish, the various types of acquirers (strategic vs. financial buys), the importance of synergies, and transaction costs of his company to a friend who owns a substanti… If the Big City Dwellers sold their $1 par value stock for $5 per share, they would receive $25,000 (5,000 shares × $5 per share) and would record the difference between the $5,000 par value of the stock (5,000 shares × $1 par value per share) and the cash received as additional paid‐in‐capital in excess of par value (often called additional paid‐in‐capital). (a). (b). In accounting there are two common uses of the term stock.One meaning of stock refers to the goods on hand which is to be sold to customers. In that situation, stock means inventory.. examples and extracts from company reports. It is prepared on the last day of an accounting year. The accounting treatment of closing stock in the financial statements of Mr. X., will be as follows: (a) The following adjustment entry will be passed at the end of the year: 31.3.2012 Closing Stock A/c Dr. 30,000 To Trading A/c 30,000 (For Closing stock transferred to Trading A/c) (b) Trading A/c of Mr. X for the year ending 31.3.2012 Dr. Cr. Stock issued in exchange for non-cash assets or services. Gross profit of a business is a very important data since all business expenses are met out of gross profit. When this occurs, the common stock and additional paid‐in‐capital accounts are decreased (debited) for the amounts recorded in these accounts when the stock was originally issued and cash is decreased (credited) for the amount paid to repurchase the stock. If corporations issue stock in exchange for assets or as payment for services rendered, a value must be assigned using the cost principle. 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