Many States Limit the Amount That May Be Paid to Acquire

question 32

Essay

Many states limit the amount that may be paid to acquire treasury stock to the balance in Retained Earnings.States also restrict the amount of retained earnings available for dividends by the cost of the treasury stock.
Required:
Explain why these restrictions are necessary and how they can be removed.

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Definitions:

Major Depression

A psychological condition marked by a constant state of sadness or a lack of enthusiasm in tasks, resulting in considerable disruption to daily functioning.

Systematic Desensitization

A behavioral therapy technique aimed at reducing phobic or anxiety responses by gradually exposing the patient to the feared object or situation.

Shaping

A method of teaching new behaviors by using reinforcement of successive approximations to the desired behavior.

Social Anxiety

A chronic mental health condition characterized by significant anxiety or fear of being judged, negatively evaluated, or rejected in a social or performance situation.