On January 1, 20X1, Paul, Inc

question 23

Multiple Choice

On January 1, 20X1, Paul, Inc. acquired a 90% interest in Stephan Company. The $45,000 excess of purchase price (parent's share only) was attributable to goodwill. On January 1, 20X3, Stephan Company had the following stockholders' equity: On January 2, 20X3, Stephan sold 2,000 additional shares in a private offering. Stephan issued the new shares for $70 per share; Paul, Inc. purchased 600 of the shares. As a result of this sale, there is a(n)

• A)gain on the consolidated income statement of $5,000.
• B)decrease in the controlling interest paid-in excess of $5,000.
• C)increase in the controlling interest paid-in capital in excess of par of $5,000
• D)increase in the controlling interest Retained Earnings of $5,000

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Definitions:

Defense Mechanism

Psychological strategies unconsciously used by individuals to protect themselves from anxiety and to cope with reality.

Denial

A defense mechanism in which confrontation with a personal problem or with reality is avoided by denying the existence of the problem or reality.

Summer Job

Temporary employment typically taken during the summer months, often by students, to gain work experience or earn money.

Defense Mechanism

Psychological strategies brought into play by individuals or the psyche to manage stress, anxiety, and internal or external demands that are perceived as threatening.