Treasury shares
IAS 32 requires an entity’s own equity instruments reacquired to be deducted from equity. No gain or loss is recognised in profit or loss on purchase, sale, issue or cancellation of the entity’s own equity instruments; consideration is recognised in equity. Legal rights attached to treasury shares, including voting or dividends, depend on applicable law and should not be assumed to be identical in every jurisdiction. IAS 33 addresses their effect on shares outstanding for EPS.
Worked example
A company repurchases 10,000 of its own shares for $30,000 and holds them in treasury. It deducts $30,000 from equity, rather than recognising the shares as a financial asset or a loss in profit or loss.
Common mistake
Recording treasury shares as an investment asset or recognising a profit when the entity later sells its own shares for more than their purchase price.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Supporting | September 2026–June 2027 |
| ACCA | SBR | Supporting | September 2026–June 2027 |