1 Once upon a time, when you bought broccoli you bought the whole vegetable, stems and crowns. Then it became customary for grocery store produce departments to separate the crowns from the stems and to sell the crowns at a premium. 2  Iâm not a fan of this practice, because I like both parts of the broccoli plant.
A company's first issue of common stock to the public is called an Initial Public Offering. Afterwards, a corporation may issue new equity at any time in order to finance its growth. When new common shares are offered to existing shareholders first, this is called a rights offering.
When treasury stock is reissued at a price exceeding its cost, the cost method records the increase in paid-in capital related to treasury stock. This account is an owners' equity account - treasury stock transactions do not affect earnings. The increase for this situation is 500($10 - $6) = $2,000.