If a corporation repurchases 500 shares of its previously-issued common stock then retires these shares, which of the following is true?

Question

Quizplus · Accepted Answer

When a corporation repurchases its previously issued common stock and retires them, it reduces the number of outstanding shares. As a result, the common stock and paid-in capital accounts must be decreased by the amount of the original issue price. No new type of stock needs to be issued as the retired shares are not being replaced. Approval from the state is not required for this type of transaction. Additionally, the gain or loss from the repurchase would only need to be recorded if the cost to repurchase the shares is different from their original issue price.

If a Corporation Repurchases 500 Shares of Its Previously-Issued Common