Stock liquidation

[pete]

How do I account for the return of capital stock to my company treasury,
without any actual exchange of cash? The return was part of a business
deal . My inclination is that I could use "other income"? Sure my
expensive CPA will deal with it at year-end, but would like an idea
beforehand of how something like this will be accounted for.

 

[David Jensen]

How do I account for the return of capital stock to my company treasury,
without any actual exchange of cash? The return was part of a business
deal . My inclination is that I could use "other income"? Sure my
expensive CPA will deal with it at year-end, but would like an idea
beforehand of how something like this will be accounted for.

There's not enough information about the business deal to answer
properly. Was the revenue part of the ongoing line of business or some
sort of transfer of assets to an investor for stock? Was the capital
stock returned at the value it had been booked at, or were there
retained earnings associated with it?

If, for example, it is a trade of assets for stock, it may look
something like:

Accumulated Depreciation $10,000.00
Capital Stock 40,000.00
Retained Earnings 10,000.00
Fixed Assets $50,000.00
Gain on Sale of Assets 10,000.00

There are many variations, depending on the circumstances. This is the
kind of question that it's definitely worth talking to your accountant
about -- particularly if there happen to be any tax consequences that
you need to prepare for.