REFERENCE: Ref.06_03 These Questions Are Based on the Following Information and Should

question 9

Multiple Choice

REFERENCE: Ref.06_03
These questions are based on the following information and should be viewed as independent situations.
Popper Co.purchased 80% of the common stock of Cocker Co.on January 1,2004,when Cocker had the following stockholders' equity accounts. To acquire this interest in Cocker,Popper paid a total of $682,000 with any excess cost being allocated to goodwill,which has been measured for impairment annually and has not been determined to be impaired as of January 1,2009.
On January 1,2009,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 1,2009,Cocker issued 10,000 additional shares of common stock for $21 per share.Popper did not acquire any of this newly issued stock.How would this transaction affect the additional paid-in capital of the parent company?

• A)$0.
• B)decrease it by $23,240.
• C)decrease it by $68,250.
• D)decrease it by $45,060.
• E)decrease it by $43,680.

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Definitions:

Accounting Profit

The net income for a company, calculated by subtracting total expenses from total revenues.

Depreciation

The approach in accounting where the expense of a tangible or physical asset is spread across its lifespan.

Payroll Expense

The total amount of money a company pays to its employees as salaries and wages, including taxes and other deductions.

Depreciation Expense

The distribution of a physical asset's cost across its lifespan, mirroring its depreciation over time.