Cash (debit) $2000 [100 shares x $20 per share], APIC (credit) $200, [$20 per shares - $18 per share = $2 x 100 shares], Treasury Stock (credit) $1800 [$2000 - $200]
A treasury stock, also known as an acquired stock, is a stock that the issuing business buys back to lower the number of outstanding shares traded publicly. Instead of paying dividends, stock repurchases are utilised as a tax-efficient way to transfer money to shareholders in countries that treat capital gains more kindly. Companies may repurchase their stock if they believe the open market to be undervaluing it. Other times, businesses repurchase their shares to lessen the dilution brought on by employee incentive pay schemes. Protection of the business from a potential takeover threat is another justification for stock repurchases. Treasury share is the British equivalent of treasury stock, which is a term used in the United States. Government bonds or gilts are referred to as Treasury stocks in the UK.
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