PEB/KAB Corp. has recently become the target of a takeover attempt by Daisy & Sons, one of its largest shareholders. Daisy owns 20,000 shares of PEB/KAB Corp, giving her a 39% stake in the company. Thecurrent market value of Daisys shares total $130,000. After negotiations, PEB/KAB Corp and Daisy haveentered into an arrangement whereby they will buy half of Daisys stake in the company for $90,000,and Daisy will agree not to buy any more shares of PEB/KAB Corp. on the open market

.1) You are an accountant at PEB/KABCorp. In discussing this transaction with you, the CEO ofPEB/KAB Corp believes that even though the company has paid $25,000 above market value forDaisys shares, PEB/KAB Corp can still allocate the full purchase price to the Treasury Stockaccount.Is the CEO correct? Research the appropriate Codification and describe the proper accountingtreatment for this situation.

2) When PEB/KAB Corp reacquired the shares from Daisy the shares were acquired for purposesother than retirement. However, the CEO would like to account for the shares as if they arebeing retired. Is than an option allowed by GAAP? Give the appropriate Codification section tosupport your answer.

3) Assume PEB/KAB Corp. did not buy back Daisys shares but rather paid Daisy $25,000 cash not topurchase additional shares of PEB/KAB Corp. How should PEB/KAB Corp account for the$25,000 payment? Research the appropriate Codification and describe the proper accountingtreatment for this situation

Provide appropriate Codification and describe the proper accounting treatment for this situation