Beaverhead Creek Inc. bottles and distributes spring water. On March 4 of the current year, Beaverhead Creek
Question:
a. What is the balance of Treasury Stock on December 31 of the current year?
b. Where will the balance of Treasury Stock be reported on the balance sheet?
c. For what reasons might Beaverhead Creek have purchased the treasury stock?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Step by Step Answer:
a 450000 90 5000 shares b In the Stockholders Equity section ...View the full answer
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Treasury stock refers to shares of a company\'s own stock that the company has bought back from its shareholders and now holds as a form of asset on its balance sheet. When a company buys back its own stock, it reduces the number of outstanding shares in the market, which can potentially increase the value of the remaining shares. Treasury stock can be acquired through a variety of methods, such as open market purchases, negotiated transactions, or as a result of converting convertible securities. Companies may buy back their own shares for a number of reasons, including to return capital to shareholders, to signal confidence in the company\'s future, or to use the shares for employee stock option plans. While treasury stock does not pay dividends, it can be reissued by the company at a later time, which could dilute the value of the remaining shares. Companies are required to report their treasury stock holdings in their financial statements.
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