Answered: Explain how treasury stock affects the…

Explain how treasury stock affects the stockholder’s equity section of the balancesheet and the calculation of earnings per share.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Explain how treasury stock affects the stockholder’s equity section of the balancesheet and the calculation of earnings per share.

Definition Definition Assets available to stockholders after a company's liabilities are paid off. Stockholders’ equity is also sometimes referred to as owner's equity. A stockholders’ equity or book value generally includes common stock, preferred stock, and retained earnings and is an indicator of a company's financial strength.

Expert Solution

Explanation -

Stockholder's Equity -

Stockholder's Equity is the section of the balance sheet. It includes Common Stock, Paid in Capital, Retained Earnings and Treasury Stock will be deducted from it.

Earnings per Share -

It is the value calculated to show the earning company achieved per share of outstanding.

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