Pixel Points Inc

question 20

Essay

Pixel Points Inc. has a single class of shares. As at its year ended December 31, 2020, the company had 1,000,000 shares issued and outstanding. These shares have a book value of $5,000,000 on the balance sheet.
During 2021, Pixel Points repurchased 5% of the issued shares from one of the minority shareholders at a cost of $7 per share. The company held these shares in treasury and later found a buyer for half of these shares at $8 per share. The other shares were sold at $6 to another investor.
Required:
Assume the Pixel Points fallows the guidance in ASPE pertaining to accounting for equity transactions. Record the share transactions using the single-transaction method for treasury shares, which is the preferred accounting method.

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Definitions:

Supervisory Board

A group elected to oversee the management of an organization and make significant decisions on its behalf.

Corporate Structure

The organizational framework of a company, detailing the roles, responsibilities, and hierarchy within the organization.

Management

the process of directing, controlling, and coordinating the operations and resources of an organization or project.

Closely Held Corporations

Corporations where a small group of shareholders control the majority of the shares, often involving family ownership or a tight-knit group of investors.