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Author: gym0 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120806  
Subject: buy backs Date: 10/14/2002 1:15 PM
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I asked an accounting question on another board and a TMF advised
me to use this board. I am interested in the accounting of a
company share buy back program. Not interested in pros or cons
of using this device.
1. When a company buys stock on open market, I assume they pay
cash. What asset account do they credit?

2. What happens to actual shares purchased? Do they simply keep
the actual certificate? Or is there a procedure used to
eliminate the stock? Does this have any bearing on the
number of shares authorized to issue, but not issued?

3. If, at a later date, share options are exercised at a price
much lower than market price, but at the same price company
paid when they purchased shares on open market, can
these shares be involved in that transaction? If so, how
would this be done on companies books?

4. If company must purchase shares to transfer to option
taker, do the just debit cash and credit expense account
for the difference in value?

As you can see from these questions, I am not an expert in this area.
My talent lies in a card game called "go fish". If any of you
would like some pointers please feel free to ask.

My thanks to whoever answers these questions for me.



gym0
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