Treasury stock represents stock that has been issued, subscribed in the past, and later repurchased from shareholders. Motives for repurchasing shares may be to provide employees with stock bonuses, use these stocks for employee savings plans, or to boost the market value of the stock. If treasury stock is reissued or cancelled, it is no longer treasury stock. The accounting method most commonly employed to record the purchase and sale of treasury stock is the cost basis. The purchase or sale price is used to record the entry with no consideration given to par value or original issue price. When the stock is resold a Paid-In Capital from Sale of Treasury Stock account is used to record any premiums or discounts on sales.
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