Why would a company acquire treasury stock?
Companies may use treasury stock to pay for an investment or acquisition of competing businesses. These shares can also be reissued to existing shareholders to reduce dilution from incentive compensation plans for employees.
Why would a company purchase treasury stock quizlet?
a corporation's own stock that has been reacquired by the corporation and is being held for future use. A corporation may acquire treasury stock for various reasons: 1. To reissue the shares to officers and employees under bonus and stock compensation plans.
When treasury stock is acquired what is the effect?
When treasury stock is acquired, what is the effect on assets and stockholders' equity? A. Assets and stockholders' equity increase.
What is treasury stock Why do corporations purchase their own shares is treasury stock an asset How should it be reported in the balance sheet?
Understanding Treasury Stock (Treasury Shares) Treasury stock is a contra equity account recorded in the shareholders' equity section of the balance sheet. Because treasury stock represents the number of shares repurchased from the open market, it reduces shareholders' equity by the amount paid for the stock.
Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?
Which of the following is a reason that a corporation would prefer to issue stock instead of bonds? Dividend payments can be deducted for income tax purposes but interest payments cannot. Expansion is accomplished without surrendering ownership control.
When a company purchases treasury stock which of the following statements are true?
When a company purchases treasury stock, which of the following statements is true? The cost of the treasury stock reduces stockholders' equity. If a company purchases treasury stock for $6,000 and then reissues it for $5,000, the difference of $1,000 is: a decrease in stockholders' equity.
How does the purchase of treasury stock affect the financial statements quizlet?
Purchasing treasury stock does not affect the income statement. Treasury stock transactions are transactions between a corporation and its investors and therefore, are financing activities.
When treasury stock is acquired what is the effect on assets and stockholder equity?
Recording the Purchase of Treasury Stock The effect of the transaction is to reduce both assets and stockholders' equity by $24,000. The corporation can sell its treasury stock at any time. The subsequent resale can be either above or below its repurchase price.
What is a treasury stock quizlet?
Define Treasury Stock. A corporation's own stock that was issued then reacquired (purchased or donated), but not retired; it is held "in the treasury" until later sold, distributed, or retired.
When treasury stock is sold for more than the company originally paid to purchase the shares?
When treasury stock is sold for an amount greater than its cost, the difference should be credited to Gain on Sale of Treasury Stock and reported as other income on the income statement.