Question

Please provide reasoning.

When common stock is sold to a corporation a journal entry is prepared which includes a debit to cash and a credit to the common stock account. If the debit to cash is greater than the credit to the common stock account then it can be assumes that:

            a. The common stock was sold at a discount

            b. a gain on the sale of stock is a part of the transaction

c. the stated value of the common stock is less than the per share price investors were willing to pay.

d. the common stock is worth more than its current market value

Which of the following costs incurred internally to create an intangible asset is generally expensed?

            a. Research and development

            b. Filing costs

            c. all of these answer choices are correct.

            d. Legal costs.

Answer 1

Option C.

The extra cash in Debit means that the market value is more than the stated/face value. So, the investors are willing to pay extra cash for this shares. A high market value means the company os performing well.

Option C  

When an intangible asset is created internally, all the expenses incurred should be treated as revenue expenditure only. Hence, all the options a, b, d should be expesed.

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