Shareholder share sales do not impact company equity

Steps:

• The transaction occurs between the existing shareholder and a buyer, bypassing the company.
• Company's ordinary share capital reflects issued shares at nominal value, unchanged by secondary market trades.
• Share premium account records excess over nominal value from company issuances only, not resales.
• Thus, no adjustments to company's statement of financial position.

Why D is correct:

• Under accounting standards (e.g., IAS 1), secondary market share transactions do not affect the issuer's equity accounts, as no cash flows to or from the company.

Why the others are wrong:

• A and B: Incorrectly assume company repurchase or issuance, decreasing capital and increasing premium, which does not occur.
• C: Wrong, as share premium is unaffected by shareholder sales, with no decrease.

Final answer: D