Ferarro Corp. purchases 80,000 shares of its common stock, with a par value of $10, for $76 per share. Ferraro reissues 70,000 of these shares in exchange for a copyright from Walters. The market value of the copyright, at the time of the exchange, was unknown, but the market value of the stock was $69. Currently, there is no additional paid in capital from treasury stock on the books.

Which of the following is true?

1. None of the above

2. Stockholders' Equity will decrease by $5,320,000

3. Assets will increase by $5,320,000

4. Retained earnings will decrease by $490,000