For Numerous Reasons A Corporation May Reacquire Shares Of Its Own Capital Stock

For numerous reasons, a corporation may reacquire shares of its own capital stock. When a company purchases treasury stock, it has two options as to how to account for the shares: the cost method and the par value method.

Required: Compare and contrast the cost method and the par value method for each of the following:

  • Purchase of shares at a price less than par value.
  • Purchase of shares at a price greater than par value.
  • Subsequent resale of treasury shares at a price less than purchase price but more than par value

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