Please Refer to the Following Information for Peartree Company

question 93

Multiple Choice

Please refer to the following information for Peartree Company:
• Common stock, $1.00 par, 100,000 issued, 95,000 outstanding
• Paid-in capital in excess of par: $2,150,000
• Retained earnings: $910,000
• Treasury stock: 5,000 shares purchased at $20 per share
-
If Peartree resold 800 shares of treasury stock for $15 per share, which of the following statements would be TRUE?

• A) The total equity of the company would be unchanged.
• B) The total equity of the company would go up by $12,000.
• C) The total equity of the company would go down by $12,000.
• D) The total equity of the company would go down by $4,000.

Calculate the correct amount to be shown in the investment account based on dividends received and percentage of ownership.

Identify the relationship and accounting treatment for parent and subsidiary companies.

Understand the accounting valuation and presentation of short-term investments on the balance sheet.

Recognize the requirement and presentation of unrealized gains or losses on investments and their effect on financial statements.

---

Definitions:

Crowdfunders

Individuals or entities that contribute financial resources to projects or ventures through crowdfunding platforms.

Bootstrapping Strategy

A self-funding approach where a startup or project is funded by the founders' personal finances or generated revenue rather than external investors.

Sweat Equity

The non-monetary contribution, such as time, effort, and labor, that founders or employees provide to increase the value of a startup or business.

Software Application

A program or set of programs designed to perform a group of coordinated functions, tasks, or activities for the benefit of the user.