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Briefly explain the cost method and the par (stated value) method of accounting for treasury stock, with examples.

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Briefly explain the cost method and the par (stated value) method of accounting for treasury stock, with examples.

Under the cost method of accounting for treasury stock, the cost of the shares of stock is debited to the treasury stock account.

50 shares of stock are acquired at $40 each. 50 * 40 = 2,000

The journal entry would appear as follows, to illustrate how the cost method works:
Treasury stock ...

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The expert briefly explain the cost method and the par (stated value) method of accounting for treasury stock, with examples.

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Estimating a Firm's WACC with Relevant Assumptions

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3. Satyr consulting generated the forecasts; their fee is $250,000

4. Operating costs are 30% of sales.

5. Net working capital is expected to be 20% of the following year's sales (ie-NWC at t=0 is 20% of t=1 sales).

6. Assume that all new equipment will be depreciated straight line to zero over the period of t=1-4 (25% per year)

7. Introduction of the white table wine is expected to increase sales of "complementary products" such as olive oil, corkscrews, and wine glasses produced by the firm, resulting in additional pre-tax operating profits of $50,000 per year.

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