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

question 57

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 $35 per share.Popper acquired 8,000 of these shares.How would this transaction affect the additional paid-in capital of the parent company?

• A)increase it by $28,700.
• B)increase it by $16,800.
• C)$0.
• D)increase it by $280,000.
• E)increase it by $593,600.

Analyze the factors affecting consumer spending patterns as indicated by the CPI.

Differentiate between the CPI and GDP deflator as measures of inflation.

Identify and understand the limitations and biases of the CPI.

Understand the calculation of inflation rates using CPI data.

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