U.S.GAAP and IFRS on accounting for repurchases and reissuances of treasury shares follow the principle that treasury stock purchases and sales are operating transactions and therefore debits Cash (for economic gains) or credits Cash (for economic losses).

Question

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Under both U.S. GAAP and IFRS, repurchases and reissuances of treasury shares are considered financing transactions, not operating transactions. Treasury stock transactions affect equity and do not impact the income statement. Cash is debited (for purchases) or credited (for sales) against equity, not as a gain or loss in operations.

USGAAP and IFRS on Accounting for Repurchases and Reissuances of Treasury