Stupid question about recording purchase of stocks

[stgermaine]

Hi. I"m currently taking introductory accounting and had a question on this homework assignment.

Let's say that Company X buys 100 shares of $10 par value stocks at $15 per stock. The brokerage fee is $250.

How would I journal this entry? With bonds bought at premium or discount, there is a way to show the par value of the bond and the actual price paid for the bond. The textbook I'm using doesn't show any examples of shares bought above/below par values, so I'm not sure how to journal purchases of stocks above/below par value.

Thank you

 

[Triest123]

Hi. I"m currently taking introductory accounting and had a question on this homework assignment.

Let's say that Company X buys 100 shares of $10 par value stocks at $15 per stock. The brokerage fee is $250.

How would I journal this entry? With bonds bought at premium or discount, there is a way to show the par value of the bond and the actual price paid for the bond. The textbook I'm using doesn't show any examples of shares bought above/below par values, so I'm not sure how to journal purchases of stocks above/below par value.

Thank you

=> You should use the cost method to record the purchase of shares.
(i.e. the acquisition price of the shares, including brokage fee, stamp
duties, etc)

Dr Equity Investment (100 shares x $15 + $250) $1,750
Cr Bank $1,750


Unlike the bonds, they are booked at amortised costs.

Pls study your textbook for the difference between a financial asset is
booked at "costs" and at "amortised costs"