Accountancy, asked by sarojyadav1268, 6 months ago

cancellation of shares at the time of buyback​

Answers

Answered by arshikhan8123
0

Answer:

For cancellation of shares at the time of buyback​, shareholder account is debited and equity share capital a/c is credited.

Explanation:

The practice of buying back shares of stock from current shareholders, either through a tender offer or on the open market, is known as share buyback. In this case, the price of the shares that are of concern is higher than the going market price.

Justifications for share buybacks:

Few ideas to invest in despite having a lot of money

A more tax-effective way to compensate shareholders is through buybacks.

Theoretically, buybacks tend to raise company valuations.

The business may indicate that the stock is cheap.

cash back to the company's shareholders

It may assist the promoters in increasing their ownership of the business.

In India, share extinguishments are the only way to do buybacks. There is no disputing the fact that buybacks provide a tax-efficient way of returning money to shareholders, even though the effect on valuations is still up for debate.

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Answered by sourasghotekar123
0

Answer:

When shares are cancelled during a buyback, the shareholder account is debited and the equity share capital account is credited.

Explanation:

  • Share buyback is the practise of repurchasing shares of stock from existing shareholders, whether through a tender offer or on the free market. The price of the shares that are causing worry in this instance is higher than the going market price.
  • Reasons for share repurchases
  • Despite having a lot of money, I have few ideas for investments.
  • Buybacks are a more tax-efficient approach to reward shareholders.
  • Theoretically, buybacks tend to increase the value of companies.
  • The company may suggest that the stock is undervalued.
  • cash returned to the business's shareholders
  • It might help the promoters acquire more ownership of the company.
  • Share extinguishments are the sole form of buyback available in India. While the impact on valuations is still up for debate, there is little denying that buybacks offer a tax-efficient manner of returning money to shareholders.

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