Pixel Points Inc

question 53

Essay

Pixel Points Inc.has a single class of shares.As at its year ended December 31,2017,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 2018,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:

Total Amount

The entirety or sum total of units, numbers, or quantities considered or calculated.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers matches the quantity supplied by producers, resulting in market balance.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive in the market.

Allocative Efficiency

A state of resource allocation where goods and services are distributed according to consumer preferences in a way that maximizes utility.