A company is planning a share repurchase programme with the following details:
• Repurchased shares will be immediately cancelled.
• The shares will be purchased at a premium to the market share price.
The current market share price is greater than the nominal value of the shares.
Which of the following statements about the impact of the share repurchase programme on the company’s financial statements is correct?
A . The premium to the nominal value would be charged to retained earnings.
B . The share capital figure would reduce by the nominal value of the shares purchased.
C . The total value of the equity in its Statement of Financial Position would remain
unchanged.
D . The premium to the market value would be charged to the Income Statement.
Answer: B
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