Popper Co Acquired 80% of the Common Stock of Cocker Co

question 75

Multiple Choice

Popper Co. acquired 80% of the common stock of Cocker Co. on January 1, 2019, when Cocker had the following stockholders' equity accounts. To acquire this interest in Cocker, Popper paid a total of $682,000 with any excess acquisition date fair value over book value being allocated to goodwill, which has been measured for impairment annually and has not been determined to be impaired as of January 1, 2022.Popper did not pay any premium when it acquired its original interest in Cocker. On January 1, 2022, Cocker reported a net book value of $1,113,000 before the following transactions were conducted. Popper uses the equity method to account for its investment in Cocker, thereby reflecting the change in book value of Cocker.On January 1, 2022, Cocker reacquired 8,000 of the outstanding shares of its own common stock for $34 per share. None of these shares belonged to Popper. How would this transaction have affected the additional paid-in capital of the parent company?

• A)$0.
• B)Decrease it by $32,900.
• C)Decrease it by $45,700.
• D)Decrease it by $23,100.
• E)Decrease it by $50,500.

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Definitions:

Cash Payments Journal

A journal used in accounting to record all cash outflows or payments made by a company.

Revenue Journal

A specialized accounting journal used to record the sales of services or goods on credit, highlighting the revenue aspect of transactions.

Fees Earned

Revenue generated by a company through the provision of services.

Customer Invoices

Financial documents issued by a seller to a buyer, detailing the sale transaction and requesting payment.