Alcoais the world's leading producer of primary aluminum, fabricated aluminum, and alumina. The following is a press

Question:

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum, and alumina. The following is a press release from the company:

ALCOA ANNOUNCES 33% INCREASE IN BASE 2-FOR-1 STOCK SPLIT
PITTSBURGH—Alcoa today announced that its Board of Directors approved a base quarterly increase of 33.3%, to 25 cents per common share from 18.75 cents per share. For a full year, base dividends will now total $1.00 compared with 75 cents before the increase.

2-FOR-1 STOCK SPLIT
The Board declared a two-for-one split of Alcoa's . The stock split is subject to approval of Alcoa shareholders who must approve an amendment to the company's articles to increase the authorized shares of at Alcoa's annual meeting. Shareholders of record on May 26 will receive an additional common share for each share held, which will be distributed on June 9.

COMMITMENT TO STOCK REPURCHASE PROGRAM
Alcoa restated its commitment to its previously authorized share repurchase program which it announced last year.

Required:
1. What are the two primary reporting alternatives Alcoa has in accounting for the repurchase of its shares? What would be the effect of the optional courses of action on total shareholders' equity? Explain. What would be the effect of the optional courses of action on how stock would be presented in Alcoa's balance sheet? If the shares are later resold for an amount greater than cost, how should Alcoa account for the sale?
2. What are the two primary courses of action Alcoa has in accounting for the stock split, and how would the choice affect Alcoa's shareholders' equity? Why?
3. How should Alcoa account for the cash and how would it affect Alcoa's balance sheet? Why?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...