Can a company purchase its own stock on the open stock market? The answer is yes. Does the company get a discounted price when it purchases its own stock? The answer is no. Can the company force a shareholder to sell stock back to the company? The answer is no Why? Companies can use their own stock to purchase other companies, for incentive pay programs, and to protect itself from hostile takeovers. Treasury stock is another general ledger account. It is a contra-equity account, which means it will have an opposite normal balance of an equity account. Treasury stock is a negative equity account because it is the amount of equity that has been taken off or out of the market. When a company issues stock, assets and equity increase. However, we a company purchases treasure stock, both assets and equity decrease. Let's remember we are talking about the company, after they have issued the stock. They buy it on the open market, just like any other buyer. So, the warning to us in the first part of the chapter is important to keep in mind with treasure stock. "A company neither earns a profit nor incurs a loss when it sells its stock to, or buys its own stock from its stockholders." RESPONSE REQUIRED by Monday, May 7.2020. What is the reasoning for the above statement? Why can't a company make a profit or suffer a loss when it buys or sells it own stock? It makes sense when we think about evaluating a company's profitability