When a Company Purchases Treasury Stock,which of the Following Statements

question 92

Multiple Choice

When a company purchases treasury stock,which of the following statements is true?

• A)Treasury stock is considered to be an asset because cash is paid for the stock.
• B)The cost of the treasury stock reduces stockholders' equity.
• C)Dividends continue to be paid on the treasury stock because it is still issued.
• D)Since treasury stock is held by the original issuer,it is no longer considered to be issued.

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Definitions:

Fair Value

A valuation process to determine the appropriate value of assets or liabilities, based on current market conditions rather than historical cost.

Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its net identifiable assets, representing the value of the company's brand, customer relationships, employee relations, and patents.

Fair Value Enterprise Method

is a valuation approach used to measure the value of a business by assessing the present value of its expected future earnings.

Non-Controlling Interest

The portion of equity interest in a subsidiary not attributable to the parent company, reflecting the minority shareholders' ownership.