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What gain and net reduction in retained earnings would

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Problem 1: Pierson Corporation owned 10,000 shares of Hunter Corporation. These shares were purchased in 2014 for P 90,000. On November 15, 2016, Pierson declared a property dividend of one share of Hunter for every ten shares of Pierson held by a shareholder. On that date, when the market price of Hunter was P14 per share, there were 90,000 shares of Pierson outstanding. What gain and net reduction in retained earnings would result from this property dividend?

                   Gain                Net Reduction in Retained Earnings

a.             P 0                        P 126,000
b.              0                             81,000
c.             45,000                     81,000
d.                 45,000                      36,000

Reference no: EM132745406

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