These Questions Are Based on the Following Information and Should

question 60

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 $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.

---

Definitions:

Object Lines

Thick solid lines in technical drawings that represent the visible edges of an object.

Two Millimeters

A length measurement equivalent to 0.07874 inches, often used to specify the dimension of small features in engineering and technical drawings.

Standard Unit

A predefined and universally accepted quantity used for measurement and comparison, such as meters, liters, or kilograms.

Linear Dimensions

Measurements related to length, width, or height that define the size of an object in one direction.