Final answer:
When shares are reacquired for less than their average per share value, the difference is credited to Retained Earnings, indicating a capital transaction that enhances shareholder equity without counting as revenue.
Step-by-step explanation:
When shares are reacquired at a cost less than the average per share value, the difference is credited to c) Retained Earnings. In accounting, this transaction is considered as a gain, but it does not meet the definition of a revenue. Instead, it is treated as a capital transaction and increases the equity of the shareholders beyond the paid-in capital. This gain represents an increase in the economic value of the shares and is thus reported in Retained Earnings, not as a Gain on Reacquisition of Shares or as a credit to any share capital account. The situation you're describing is related to the concepts of dividends and capital gains, as when investors buy shares in a company, they expect a return, which can come through dividends or the increase in the value of the stock between when it is bought and sold.