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SFAS No.
30 Accounting
for Treasury Stocks |
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Revised by the Financial Accounting Standards Committee In Taiwan on
22 June 2006. |
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Summary |
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The purpose of this Statement is to establish the accounting
standards for treasury stocks. Treasury stock is the stock
reacquired by the issued company which is not retired. A parent
company should account for its outstanding stocks held by its
subsidiary as treasury stocks when it recognizes the investment
income and prepares financial statements (including consolidated
financial statements). |
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Accounting
for the obtaining of treasury stocks |
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When a company acquires treasury stock, the acquisition cost should
be debited to the treasury stock account if the stocks are
purchased; the fair value should be debited to the treasury stock
account if the stocks are donated. The carry amount of treasury
stocks is a contra account of owners’ equity rather than an asset on
the balance sheet. |
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Accounting
for the disposal of treasury stocks |
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When treasury stocks are sold, if the selling price is above the
book value, the difference should be credited to the capital surplus
– from treasury stock transactions account. If the selling price is
below the book value, the difference should first be offset against
capital surplus from the same class of treasury stock transactions,
and the remainder, if any, debited to retained earnings. The
carrying value of treasury stocks should be calculated by using the
weighted-average approach. |
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Accounting
for the retirement of treasury stocks |
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When a company's treasury stock is retired, the treasury stock
account should be credited, and the capital surplus – premium on
stock account and capital stock account should be debited
proportionately according to the share ratio. The difference should
be credited to capital surplus or debited to capital surplus and/or
retained earnings.
This statement also specifies disclosures about treasure stock. |
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Effective
date
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This statement becomes effective for financial statements for the
fiscal year ending on and after 31 December 2006. |
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