Treasury share transactions

 Repurchase. To record a repurchase, simply record the entire amount of the purchase in
the treasury stock account.
Treasury shares (at cost) xx
Cash in bank xx
 Resale. If the treasury stock is resold at a later date, offset the sale price against
the treasury stock account, and credit any sales exceeding the repurchase cost
to the additional paid-in capital account. If the sale price is less than the
repurchase cost, charge the differential to any additional paid-in capital
remaining from prior treasury stock transactions, and any residual amount to
retained earnings if there is no remaining balance in the additional paid-in
capital account.
a) Reissuance of treasury shares at above cost
Cash in bank xx
Treasury shares (at cost) xx
Share premium – TS xx

b) Reissuance of treasury shares below cost

Cash in bank xx

(1) Share Premium – TS xx

(2) Retained Earnings xx

Treasury shares (at cost) xx

 Retirement. If management decides to permanently retire stock that it has

already accounted for under the cost method, it reverses the par value and
additional paid-in capital associated with the original stock sale, with any
remaining amount being charged to retained earnings.
a) Retirement at below original issuance price
Share Capital(at par or stated value) xx
Share Premium – original issuance xx
Treasury shares (at cost)/CIB xx
Share premium – retirement xx
b) Retirement at above original issuance price
Share Capital(at par or stated value) xx
Share Premium – original issuance xx
(1) Share Premium –TS xx
(2) Retained earnings xx
Treasury shares (at cost)/CIB xx