Presented below are three unrelated situations involving equity investments.Situation 1A debt investment portfolio, whose fair value is currently less than cost, is classified as trading but is to be reclassified as held-for-collection.Situation 2A debt investment portfolio with an aggregate fair value in excess of cost includes one particular debt investment whose fair value has declined to less than one-half of the original cost. The decline in value is considered to be permanent.Situation 3The portfolio of trading equity investments has a cost in excess of fair value of $13,500. The portfolio of non-trading equity investments has a fair value in excess of cost of $28,600
What is the effect upon carrying value and earnings for each of the situations above?
Pleasant Dolls Inc. purchases 10,000 shares of its own previously issued $10 par common stock for $290,000. Assuming the shares are held in the treasury with intent to reissue, what effect does this transaction have on (a) Net income,(b) Total assets, (c) Total paid-in capital, and (d) Total stockholders’ equity?
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