I asked an accounting question on another board and a TMF advisedme to use this board. I am interested in the accounting of acompany share buy back program. Not interested in pros or consof 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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