Presentation of Treasury Stock
B/S presentation of T/S
- Cost method: T/S is subtracted at the bottom of the shareowner equity section at cost. It is included in the “regular” shares above as well.
- Par method: T/S is subtracted from the C/S at par. Premium has already been removed.
- Retained Earnings must be restricted so it can not be used to support a dividend. T/S in many ways resembles a dividend, as it is a return to shareholders. A firm should not be able to liquidate its retained earnings through dividends and then use the remaining assets to reacquire their own shares.