A retirement of common shares:

Question

Quizplus · Accepted Answer

A retirement of common shares involves purchasing back the shares, which leads to a decrease in the number of shares issued. The par value and any additional paid-in capital associated with the shares are removed from the common shares account, resulting in a reduction in the balance in that account. The difference between the price paid for the shares and their carrying value is recognized on the income statement as a gain or loss, but this is not an inherent characteristic of a retirement of common shares. Therefore, option D, which combines the correct elements of reducing the number of shares and the common shares balance, is the best choice.

A Retirement of Common Shares