Chapter 11, Problem 12DQ

To determine

Introduction: Sometimes a corporation buys back its own shares. The stocks so re-acquired are called treasury stock. The corporation may acquire shares of their own, either to acquire shares of another corporation or to avoid a hostile takeover. In addition to that, the shares are sometimes also reacquired to reissue them to employees and to maintain a strong market for their stock.

The effect of purchase of treasury stock on the assets and total equity of the corporation.