When retiring treasury stock, retained earnings could be affected under which of the following methods? $\begin{array}{lll}
&\text { Cost Method }&\text { Par Value Method }\
\text { I. } & \text { No } & \text { No } \
\text { II. } & \text { No } & \text { Yes } \
\text { III. } & \text { Yes } & \text { No } \
\text { IV } & \text { Yes } & \text { Yes }
\end{array}$

A)I
B)II
C)III
D)IV

Question

When retiring treasury stock, retained earnings could be affected under which of the following methods? $\begin{array}{lll}
&\text { Cost Method }&\text { Par Value Method }\ 
\text { I. } & \text { No } & \text { No } \
\text { II. } & \text { No } & \text { Yes } \
\text { III. } & \text { Yes } & \text { No } \
\text { IV } & \text { Yes } & \text { Yes }
\end{array}$

A)I
B)II
C)III
D)IV

Quizplus · Accepted Answer

Under the cost method, retained earnings are not affected when treasury stock is retired. Under the par value method, retained earnings are reduced by the par value of the retired shares.

When Retiring Treasury Stock, Retained Earnings Could Be Affected Under