Question
Bramble Corp. owned 898000 shares of Cullumber Company stock. On December 31, 2018, when Bramble's account Equity Investments (Cullumber Company) had a carrying value of
Bramble Corp. owned 898000 shares of Cullumber Company stock. On December 31, 2018, when Bramble's account Equity Investments (Cullumber Company) had a carrying value of $5 per share, Bramble distributed these shares to its stockholders as a dividend. Bramble originally paid $7 for each share. Cullumber has 4990000 shares issued and outstanding, which are traded on a national stock exchange. The quoted market price for a Cullumber share was $6 on the declaration date and $8 on the distribution date.
What would be the reduction in Bramble's stockholders' equity as a result of the above transactions?
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