会计学原理Financial Accounting by Robert Libby第八版 第十一(4)

Cash (80 shares x $21) (+A) ............................................. Treasury stock, common (-XSE, +SE) ........................... Capital in excess of par (+SE) .......................................

Sept. 1:

Cash (50 shares x $19) (+A) ............................................. Capital in excess of par (-SE) ............................................ Treasury stock, common (50 shares x $20) (-XSE, +SE) . Req. 2

Dividends are not paid on treasury stock. Therefore, the amount of total cash dividends paid is reduced when treasury stock is purchased. Req. 3

The sale of treasury stock for more or less than its original purchase price does not have an impact on net income. The transaction affects only balance sheet accounts. The cash received from the sale of treasury stock is a cash inflow which would affect the Statement of Cash Flows in the financing activities section.

3,200

1,680

950 50

3,200

1,600 80 1,000

Chapter 11 - Reporting and Interpreting Owners’ Equity

E11–17. Req. 1

Case 1: When companies unexpectedly announce increases in dividends, stock prices typically increase. Depending on course objective, the instructor may want to discuss research in finance concerning dividend policy.

Case 2: Stock price is based on expectations. If the increase in operating

performance was not expected, the stock price should increase. It is not necessary to increase dividends to have a favorable stock price reaction.

Case 3: Stock dividends do not provide any economic value but they may have a signal effect and are often associated with increases in cash dividends. As a result, stock dividends do not appear to directly cause an increase in stock price but are often associated with factors that do impact favorably on price.

Req.2

Stock prices react to underlying economic events and not changes in reporting methods, per se. Markets are relatively effective in recognizing the difference

between profits generated by operations and profits generated by the use of liberal accounting policies.