On January 1, 2016, Paris Ltd On January 2, 2018, Scott Company Sold 2,500 Additional Shares

question 31

Multiple Choice

On January 1, 2016, Paris Ltd.paid $600,000 for its 75% interest in the Scott Company when Scott had total equity of $550,000.Any excess of cost over book value was attributed to equipment with a 10-year life.On January 1, 2018, Scott Company had the following stockholders' equity: ?

$\begin{array}{lr}\text { Common stock, } \$ 10 \text { par } & \$ 100,000 \\\text { Other paid-in capital } & 200,000 \\\text { Retained earnings } & 350,000\end{array}$
On January 2, 2018, Scott Company sold 2,500 additional shares of stock for $90 each in a private offering to non-controlling shareholders.As a result of this sale, which of the following changes would appear in the 2018 consolidated statements?

• A)$7,500 gain
• B)$37,500 loss
• C)$7,500 increase in controlling paid-in capital
• D)$37,500 decrease in controlling paid-in capital

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Definitions:

Monopoly Power

Monopoly power refers to the ability of a company or entity to control the supply of a good or service, and to significantly influence the terms and price under which it is sold.

Marginal Cost

The extra financial burden of producing another unit of a good or service.

Monopoly Power

The ability of a single seller to control market prices and output in a particular industry.

Market Power

The ability of a firm or group of firms to manipulate or control the price and supply of a product or service in the market.