Question

Stock issuance costs are A. credited to the Common Stock account. B. treated the same as...

Stock issuance costs are

A. credited to the Common Stock account.

B. treated the same as acquisition-related costs.

C. debited to the Equity Investment account.

D. treated as a reduction in additional paid-in capital.

Homework Answers

Answer #1

The Answer is D. treated as a reduction in additional paid-in capital.

Explanation:

1) Stock Issuance costs are reduced from additional paid-in-capital while writing the stock issue entry.

2) Option A is not correct because issuance costs are expenses if we credited to common stock account it is wrong.

3) Option B is not correct because it is not same as acquisition related costs.

4) Option C is not correct because stock issuance costs arises at stock issue but not at the time of equity investment.

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