These Questions Are Based on the Following Information and Should

question 85

Multiple Choice

These questions are based on the following information and should be viewed as independent situations. Popper Co. acquired 80% of the common stock of Cocker Co. on January 1, 2011, when Cocker had the following stockholders' equity accounts. $$\begin{array} { l r } \text { Common stock - 40,000 shares outstanding } & \$ 140,000 \\\text { Additional paid-in capital } & 105,000 \\\text { Retained earnings } & 476,000 \\ \text { Total stockholders' equity } & \$ 721,000 \\\end{array}$$ 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, 2014.
On January 1, 2014, 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, 2014, 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 $49,400.
• E)decrease it by $50,500.

---

Definitions:

Conditioning

A process in psychology that involves learning associations between certain stimuli and specific responses.

Imitation

The action of using someone or something as a model and attempting to replicate their behavior, actions, or characteristics.

Ethological Theory

An approach in psychology that emphasizes the biological and evolutionary aspects to explain human behavior and development.

Imprinting Process

A phase-sensitive learning process in which a young animal develops attachments and establishes a particular type of behavior, such as recognition of its mother.