Belajar Saham Treasuri mudah - Khusus Anak Akuntansi

Summary

This video delves into the concept of treasury stock, explaining why companies repurchase their shares and the accounting treatment involved. It covers scenarios such as using repurchased stock as employee bonuses, signaling to investors, and counteracting hostile takeovers. Through an example, the video walks through the process of buying back and reselling shares, highlighting the treatment of gains or losses, and the importance of properly categorizing treasury stock. The video also addresses the complexity of reducing a company's shares through this process and how it differs from permanently retiring shares.

Takeaways

• 😀 A company can repurchase its own shares from the market, known as 'treasury stock' or 'treasury shares'.
• 😀 Companies may repurchase shares for various reasons, such as distributing them as employee bonuses or reducing ownership concentration of certain shareholders.
• 😀 Treasury stock is not considered an asset because it can be sold again in the future, and it doesn't reduce the total number of authorized shares permanently.
• 😀 When treasury stock is bought back, it is recorded as a contra-equity account, not an asset, because it doesn't represent a permanent reduction in shares.
• 😀 A company's repurchase of shares can signal to the market that the stock is undervalued, though this doesn't guarantee a future increase in stock price.
• 😀 When treasury stock is resold, the difference between the buyback price and the resale price is recorded as a change in capital from treasury stock (not as profit).
• 😀 If the company sells treasury stock at a price higher than the repurchase cost, the difference is recorded as 'Paid-in Capital from Treasury Stock'.
• 😀 A company cannot record a profit or loss from the sale of treasury stock since it's considered an equity transaction rather than an asset sale.
• 😀 In the case where treasury stock is sold below the repurchase cost, the difference is still treated as a capital adjustment and not a loss.
• 😀 After all treasury stock is sold, any remaining balance in the 'Paid-in Capital from Treasury Stock' account should be closed out, and any remaining differences are adjusted in the retained earnings.

Q & A

What is treasury stock?

Treasury stock refers to shares that a company repurchases from the market. These shares are not considered an asset but are recorded as a contra-equity account in the company's financial statements.

Why do companies buy back their own stock?

Companies repurchase their own stock for several reasons, such as distributing shares as employee bonuses, signaling to investors that the stock is undervalued, and reducing the influence of specific shareholders or preventing hostile takeovers.

What happens to the shares once they are bought back by the company?

Once shares are bought back, they are held as treasury stock and can be resold at a later date. They are not permanently retired unless the company chooses to do so through a formal process like a reduction in capital.

What is the accounting treatment for treasury stock?

Treasury stock is not treated as an asset but as a contra-equity account. This means it reduces the total equity of the company but is not considered a separate asset on the balance sheet.

Why can’t treasury stock be considered an asset?

Treasury stock cannot be considered an asset because it represents shares that have been repurchased by the company. These shares do not contribute to the company's claim on its own assets. The ownership rights of shareholders are reduced, and thus it is classified as a contra-equity account.

What is the main difference between issuing new stock and buying back treasury stock?

When a company issues new stock, it increases the number of shares outstanding, which can dilute existing shareholders' ownership. In contrast, buying back treasury stock does not permanently reduce the number of shares unless it is canceled, but it can be resold later.

How are the profits or losses from the sale of treasury stock treated in accounting?

The profits or losses from the sale of treasury stock are not recognized as gains or losses. Instead, they are adjusted in the equity section of the balance sheet, typically as changes in capital from treasury stock.

What is 'capital from treasury stock'?

'Capital from treasury stock' refers to the difference between the cost of buying back the stock and the price at which it is resold. This difference is recorded as an adjustment to equity rather than as a profit or loss.

In the example provided, what happens when treasury stock is sold at a price higher than its repurchase cost?

When treasury stock is sold at a price higher than its repurchase cost, the difference is recorded as an increase in capital, specifically under the 'capital from treasury stock' account. It is not recognized as profit.

How does a company record a loss on the sale of treasury stock?

When treasury stock is sold at a price lower than its repurchase cost, the difference is recorded as a decrease in capital from treasury stock. This is reflected in the equity section, rather than as a loss on the income statement.