If a company purchases treasury stock for $10,000 and then reissues it for $3,000,the difference of $7,000 is
A)treated as a gain on the sale.
B)treated as a loss on the sale.
C)an increase in stockholders' equity.
D)a decrease in stockholders' equity.

Question

Quizplus · Accepted Answer

When a company reissues treasury stock for less than it was purchased, the difference is treated as a decrease in stockholders' equity. This is because treasury stock transactions are equity transactions, not profit-generating activities.

If a Company Purchases Treasury Stock for $10,000 and Then