When treasury shares are resold at a price below cost:
A) Paid-in capital and/or retained earnings is reduced.
B) Paid-in capital and/or retained earnings is increased.
C) Retained earnings is always reduced.
D) A loss is reported on the income statement

Question

Quizplus · Accepted Answer

When treasury shares are resold at a price below their cost, it results in a reduction of paid-in capital and/or retained earnings, as the loss from the sale cannot be reported on the income statement but is instead absorbed by equity accounts.

When Treasury Shares Are Resold at a Price Below Cost