When a corporation reacquires its own shares of stock,

Question

Quizplus · Accepted Answer

When a corporation reacquires its own shares of stock, it reduces the number of outstanding shares and increases the proportionate ownership of the remaining shareholders. The cost of reacquiring the shares is debited to the Treasury Stock account, and the shares are reported as a reduction of total shareholders' equity on the balance sheet. The amount debited to the Treasury Stock account is equal to the price paid to reacquire the shares, rather than their original issue price or par value. Therefore, the correct answer is B.

When a Corporation Reacquires Its Own Shares of Stock