Purchasing treasury share reduces the corporation's assets and shareholders' equity by equal amounts.

Name: Purchasing treasury share reduces the corporation's assets and shareholders' equity by equal amounts.
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Question

Quizplus · Accepted Answer

When a corporation purchases its own shares, both its assets and shareholders' equity decrease by the same amount. This is because treasury shares are no longer outstanding and cannot be used for future distributions or voting rights, thus reducing the overall value of the corporation.

Purchasing Treasury Share Reduces the Corporation's Assets and Shareholders' Equity