Business, 02.03.2020 22:02 arturocarmena10

In keeping with modernization of corporate statutes in its home state, UMC Corporation decided in 2016 to discontinue accounting for reacquired shares as treasury stock. Instead, shares repurchased will be viewed as having been retired, reassuming the status of unissued shares.

As part of the change, treasury shares held were reclassified as retired stock. At December 31, 2015, UMC's balance sheet reported the following shareholders' equity:

($ in millions)
Common stock, $1 par $225
Paid-in capital - excess of par 900
Retained earnings 1,020
Treasury stock (6 million shares at cost) (35)
Total shareholders' equity $2,110

Required:

1. Identify the type of accounting change this decision represents.

2. Prepare the journal entry to effect the reclassification of treasury shares as retired shares. (If no entry is required for a transaction/event, record "No journal entry required" in the first account field. Enter your answers in millions (i. e., 10,000,000 should be entered as 10).)

3.Record the entry to reclassify treasury shares as retired shares.

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In keeping with modernization of corporate statutes in its home state, UMC Corporation decided in 20...

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