Question

True or false: No gain or loss is reported when treasury stock is reissued because GAAP does not consider transactions between a corporation and its owners to be profit-making activities.

Answer 1

The statement is: True.

Step-by-step explanation:

When a firm purchases its own shares they become part of the company's treasury stock. This usually happens when the organization intends to sell those shares in the future. According to the General Accepted Accounting Principles (GAAP), the transactions between a firm and its owners are not considered as profit-making. Thus, when a company reissues the treasury stock shares no revenues or losses are recorded.