These Questions Are Based on the Following Information and Should

question 107

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

---

Definitions:

Recurring Charge

A recurring charge is a periodic fee charged automatically to an account for ongoing services or subscriptions.

Automatic Payment

A pre-arranged system of paying recurring bills or obligations electronically without the need for manual intervention each time.

Federal Reserve Bank

The central banking system of the United States, responsible for setting monetary policy.

Funds Availability

Funds availability is a banking term that refers to the length of time before a deposited check or electronic payment clears and becomes available for withdrawal or use.