Question

Grid Corp. acquired some of its own common shares at a price greater than both their par value and original issue price but less than their book value. Grid uses the cost method of accounting for treasury stock. What is the impact of this acquisition on total equity and the book value per common share?

Answer 1

Answer: Grid Corp. acquired some of its own common shares at a price greater than both their par value and original issue price but less than their book value. This will impact his total equity and the book value per common share.

i.e. In this particular case Equity will decrease and book value per share will increase.