The Accounting Review Vol. 15 No. 2 1940
PREMIUM ON REDEMPTION OF PREFERRED-STOCK ISSUES.
Abstract
The question whether premiums paid upon the redemption of an entire issue of preferred stock should be charged to earned surplus or capital surplus, has been the subject of difference of opinion among accountants for a long time. Even at present, many members of the accountancy profession seem to take opposite points of view in the matter. This study is based on the reasoning developed from the economic concept of profit and loss in business and from the single entry method of calculating profits. The conclusion, that the premium paid upon the redemption of an entire issue of preferred stock is properly chargeable to earned surplus to the extent that the total premium paid exceeds the amount of premium paid into the issuing corporation on the same issue of preferred stock at the time it was issued. The question under consideration does not deal with the treatment of discount on preferred stock when an entire issue is redeemed at a discount. Accordingly, no comment is made on that phase of the subject.
- DOI
- 10.2308/tar-7047587
- Volume
- 15
- Issue
- 2
- Pages
- 205-211
- Language
- en
- Sources
- openalex crossref