Hi. Ive got a small family farm and we incorporated last year for various reasons.
We started with 4 shareholders and now only have 3 after buying out the fourth.
We valued the shares at the time of the buyout based on cash-on-hand(the companie's only asset). I plugged in the number to Simply Accounting and it shows under "Equity - Share Capital - Account Preferred Shares" as a negative number. Which might fit with other answers I have seen that mention "Contra Equity"... I assume the software knows what it is doing and I checked that cash was credited for the transaction.
When the shares were originally issued the lawyer advised us that valuing the shares was not important and so I haven't paid any attention to the issue until I started muddling through the taxes.
*Question 1: Should the Share Capital Equity under the Account Preferred Shares number appear as a negative?
*Question 2: Because there is a value on the books for the treasury shares would it be prudent(save me headaches) to value the remaining stocks (held by shareholders) and record them to the books?
*Question 3: Which accounts would be debited/credited to account for the stock held by shareholders.