B. Share repurchases (treasury stock) (4) Did PepsiCo repurchase common shares during the year ended December...
B. Share repurchases (treasury stock) (4) Did PepsiCo repurchase common shares during the year ended December 31, 2018? How do you know? What was the effect of this purchase on the balance sheet, the income statement, and the statement of cash flows?
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Homework Answers
Yes, PepsiCo repurchase common shares during the year ended December 31, 2018. A treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market. Thus, Company has repurchased the common shares.
In Balancesheet, it will reduce the stockholders equity. Treasury stock is a contra equity account, meaning that it acts as an offset to the common stock account. Thus, a $100 balance in treasury stock would offset $100 worth of common stock and, therefore, reduce stockholders' equity by $100.
In the income statement, the company's earnings per share may increase because there are fewer shares outstanding.
In the statement of cash flows, it will be shown as cash outflow from Financing Activities.
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