When a company reacquires its own shares at a price that is lower than the average issue price, there will be a loss on the reacquisition.

Question

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When a company reacquires its own shares at a price lower than the average issue price, it does not record a loss; instead, it may reduce the amounts paid in excess of par (additional paid-in capital) or retained earnings, depending on the accounting practices and laws applicable in the jurisdiction.

When a Company Reacquires Its Own Shares at a Price