Question

Grant, Inc. had 60,000 shares of treasury stock ($10 par value) at December 31, 2014, which...

Grant, Inc. had 60,000 shares of treasury stock ($10 par value) at December 31, 2014, which it acquired at $12 per share. On June 4, 2015, Grant issued 30,000 treasury shares to employees who exercised options under Grant's employee stock option plan. The market value per share was $14 at December 31, 2014, $15 at June 4, 2015, and $18 at December 31, 2015. The stock options had been granted for $13 per share. The cost method is used. What is the balance of the treasury stock on Grant's balance sheet at December 31, 2015?

a. $210,000.

b. $270,000.

c. $330,000.

d. $360,000.

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Answer #1

Answer : Option D ($3,60,000)

Explanation :

The balance in the treasury stock would be 30000 Shares * $12 = $3,60,000

The value of the treasury stock doesn't changes whenever there is a fluctuation in the market, It will be same as the purchase price.If any increase in the market value or decrease in the market value will only be booked when they are sold out or issued again as the profit / loss respectively.Therefore the balance in the treasury stock is (60000-30000)*$12 = $3,60,000

Thanks....

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