1 A. Which of the following is false related to the effect of donated (treasury) stock from a shareholder to the company?

a. The book value per common share is higher

b. Donated stock is recorded at fair value

c. The number of share outstanding declines

d. Total shareholders' equity is reduced

1B. A firm repurchases 10 percent of its outstanding common stock. What is the effect of this treasury stock transaction?

a. The common stock shares will be permanently retired

b. Its debt to total capital ratio will increase

c. Treasury stockholders will have the same rights as common stockholders

d. Total stockholders' equity will remain unchanged, with treasury stock replacing common stock.