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A. It is unretired but no longer outstanding, yet it has all the rights of outstanding shares.
B. It is an asset representing shares that can be sold in the future or otherwise issued in stock option plans or in effectuating business combinations.
C. It is unable to participate in the liquidation proceeds of the firm but able to participate in regular cash dividend distributions as well as stock dividends and stock splits.
D. It is reflected in shareholders’ equity as a contra account.
The Correct Answer: A -
It is not retired but no longer outstanding
D. It is reflected in shareholders’ equity as a contra account.
Treasury stock recorded at cost is a reduction of total equity. Treasury stock recorded at par is a direct reduction of the pertinent contributed capital balance, e.g., common stock or preferred stock
B. It is an asset representing shares that can be sold in the future or otherwise issued in stock option plans or in effectuating business combinations.
