These Questions Are Based on the Following Information and Should

question 26

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, 2009, 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, 2012.
On January 1, 2012, 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, 2012, 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:

Full-fare Air Ticket

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Decision Tree

A graphical representation of possible solutions to a decision based on certain conditions or probabilities.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Coefficient of Variation

A measure of relative variability calculated as the standard deviation divided by the mean, often expressed as a percentage.