Pierson Corporation owned 10,000 shares of Hunter Corporation. These shares were purchased in 2014 for $90,000. On
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Question:
Pierson Corporation owned 10,000 shares of Hunter Corporation. These shares were purchased in 2014 for $90,000. On November 15, 2018, Pierson declared a property dividend of one share of Hunter for every 10 shares of Pierson held by a stockholder. On that date, when the market price of Hunter was $14 per share, there were 90,000 shares of Pierson outstanding. What gain and net reduction in retained earnings would result from this property dividend?
Net Reduction in
Gain
Retained Earnings
1.$0
$126,000
2.$0
$81,000
3.$45,000
$81,000
4.$45,000
$36,000
Posted Date: