Code of Federal Regulations Title 49. Transportation 49 CFR § 1201.5-4 5–4 [1201.5–4] Discount, premium, and assessment on capital stock

(a) Separate ledger accounts shall be provided for each subclass of capital stock issued or assumed by the accounting company to cover discount suffered and premium realized at the time of sale of capital stock. General levies or assessments against stockholders shall be credited to the appropriate ledger accounts for the subclass of capital stock against which the levy or assessment is made.

(b) The total of net debit balance in these ledger accounts shall be included in account 793, Discount on capital stock, and the total of net credit balances in account 794, Premiums and assessments on capital stock.

(c) Discount on each subclass of capital stock may be offset or reduced by charges to account 794, Premiums and assessments on capital stock, to the extent that net gains from premiums or assessments have been included therein or to account 795, Other capital, to the extent that net gains from reacquisition and resale or retirement of capital stock applicable to such subclass have been included therein. Any remaining discount may be amortized by charge to account 616. Other debits to retained earnings, or may be retained and carried in account 793, Discount on capital stock, until the stock to which the discount applies is retired.

(d) In case the accounting company is permitted and elects with the approval of the Board, to distribute all or any part of the net balance of other paid-in capital to its stockholders, the amount thus distributed shall be charged to account 795, Other capital.

(e) When capital stock is reacquired, either by purchase or donation, and is retired or cancelled, account 791, Capital stock, shall be charged with the par value, stated value of no par stock, or if no par stock without stated value, the proportionate amount at which the particular class of stock is included in account 791. Any excess of reacquisition cost over the recorded value of the stock shall be charged to account 795, Other capital, to the extent of the accumulated net gains included in this account applicable to reacquisition and resale or retirement of such subclass. Any remaining excess reacquisition cost shall be charged to account 616, Other debits to retained earnings. Any excess of recorded value over reacquisition cost shall be credited to account 795, Other capital.

(f) When capital stock is reacquired, either by purchase or donation, and is not retired or cancelled, nor properly includable in sinking or other funds, the reacquisition cost shall be charged to account 798.5, Treasury stock.

(g) When treasury stock is resold, account 798.5, Treasury stock, shall be credited with the cost paid for it. Gains shall be credited to account 795, ‘Other capital.’ Losses shall be charged to account 795, Other capital, to the extent that previous net gains from sales or retirements of the same class of stock are included therein;  otherwise, to account 616, Other debits to retained earnings.