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Pense Co.purchased 40% of the stock of Stretch Co.in Year 1 for $100,000.Stretch had net income in Year 1 of $50,000 and net income in Year 2 of $30,000.Stretch also paid total dividends of $20,000 in Year 2.On January 1, Year 3, Pense Co.sold its investment in Stretch Co.to GE Capital Corporation (GE) for $130,000.What entry would Pense Co.make to record the sale of Stretch Co.?
Moral Hazard
The situation in which one party takes greater risks because another party bears the cost of those risks, often seen in insurance and financial sectors.
Contract Parties
The entities involved in a contractual agreement, typically including at least one offeror and one offeree.
Adverse Selection
A situation where asymmetric information results in high-risk individuals being more likely to engage in agreements, potentially leading to market failure.
Cafeteria Plan
A type of employee benefit plan that allows workers to choose from a variety of pre-tax benefit options to suit their personal needs.
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