The Two Methods of Accounting for Treasury Stock Are the Cost

question 94

True/False

The two methods of accounting for treasury stock are the cost method and the fair value method.

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Definitions:

Treasury Stock Transaction

Refers to the buying back or reacquisition of previously sold shares by the issuing company, reducing the amount of outstanding stock on the open market.

Additional Paid-in Capital

The amount of money investors pay above the par value of a stock.

Retirement of Shares

The process by which a company buys back its own shares from the marketplace, reducing the amount of outstanding shares.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities; represents ownership equity in a firm.