These Questions Are Based on the Following Information and Should

question 33

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.
$\begin{array} { l r } \text { Common stock } - 40,000 \text { shares outstanding } & \$ 140,000 \\\text { Additional paid-in capital } & 105,000 \\\text { Retained earnings } & 476,000 \\ \text { Total stockholders' equity } & \$ 721,000 \\\end{array}$ 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, 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 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.

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Definitions:

Near-Sourcing

The practice of transferring a business operation closer to where products are sold or where the business is located, often to reduce lead times and costs.

Stockout

A situation in which the demand or requirement for an item cannot be fulfilled from the current inventory or stock.

Push-Pull Strategy

A marketing strategy that combines both push tactics (directly promoting products to consumers) and pull tactics (motivating consumers to seek out your brand) for optimum demand generation.

Purchase Agreement

A legal contract outlining the terms and conditions related to the purchase of goods, services, or property.