Treasury Stock
Repurchasing Company Shares
Treasury stock consists of shares that a company has previously issued and later repurchased. These shares are not considered outstanding and generally do not receive dividends or voting rights.
- Treasury stock reduces total shareholders' equity.
- Outstanding shares decrease after repurchase.
- Treasury shares are not assets.
- Repurchases may increase earnings per share by reducing shares outstanding.
Note
Under the cost method, treasury stock is recorded at the amount paid to repurchase the shares.
Summary
Treasury stock represents reacquired shares that reduce shareholders' equity and outstanding shares.