If a problem does not mentioned whether to use cost method or par value method, what do you assume? Cost or Par?

Thanks for your help.

Assume "cost method"

Becker material mentions that "cost method" is used in 95% of the cases.

Thank you my friends. I think you both are rightbased on the answer. How would the entries look like ?

 The problem is from Gleim, SU#14, Q#8.

In year 2, Fogg, Inc. issued $10 par value common stock for $25 per share. No other common stock transaction occurred until March 31, Year 4, when Fogg acquired some of the issued shares for $20 per share and retired them. Which of the following statement accurately states an effect of this acquisition and retirement?

1. Year 4 net income is decreased
2. Year 4 net income is increased
3. Additional paid in capital is decreased
4. Retained earnings is increased.

Answer is ‘C”

try to go through the below link :-

http://www.cpanet.com/cpa_forum/forum_posts.asp?TID=22585&am p;am p;PN=3

It explains various scenarios of "stock retirement". It should be helpful in understanding the whole process and which accounts to debit/credit... Good Luck !