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The stock of issuing company which it repurchases or buybacks from the shareholders is said as treasury Stock. It does not have any rights as normal shares which are outstanding . It reduces the total Equity Capital of Company and Company has the rights to sale such stock again as per their choice.
They are calculated in Weighted AverageNumber of Commom Shares Outstanding only for the time period before they are repurchased.
A treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market ("open market" including insiders' holdings).
Stock repurchases are often used as a tax-efficient method to put cash into shareholders' hands, rather than paying dividends. Sometimes, companies do this when they feel that their stock is undervalued on the open market. Other times, companies do this to provide a "bonus" to incentive compensation plans for employees. Rather than receive cash, recipients receive an asset that might appreciate in value faster than cash saved in a bank account. Another motive for stock repurchase is to protect the company against a takeover threat.
Meaning
The portion of shares that a company keeps in their own treasury. Treasury stock may have come from a repurchase or buyback from shareholders; or it may have never been issued to the public in the first place. These shares don't pay dividends, have no voting rights, and should not be included in shares outstanding calculations.
Treatment
These shares are shown as deductions from equity (US Standard). As per british standard these shares are shown as asset in the balance sheet.
Implication
Treasury stock (TS) is often created when shares of a company are initially issued. In this case, not all shares are issued to the public, as some are kept in the companies treasury to be used to create extra cash should it be needed. Another reason may be to keep a controlling interest within the treasury to help ward off hostile takeovers.
TS can be advantageous to shareholders because it lowers the number of shares outstanding. For example, if a company merely buys stock to improve financial ratios such as EPS or P/E, then the buyback is detrimental to the shareholders, and it is done without the shareholders' best interests in mind.
when an issuing company repurchase or buyback its shares from the shareholders.these shares are known as treasury Stock. No dividend is going to pay them and further, these shares have no voting right. Regarding treasury stock, the company can reissue(resale) them, or can hold these shares for indefinately period, or even cancel them. Best of luck
